tag:blogger.com,1999:blog-50045897552202436652024-02-19T21:00:08.556+08:00Investor JuanInvestor Juanhttp://www.blogger.com/profile/06304546864904571937noreply@blogger.comBlogger379125tag:blogger.com,1999:blog-5004589755220243665.post-29861534999088426462013-08-04T00:21:00.002+08:002013-08-04T00:21:24.402+08:00And Not a Single F Was GivenI'm here, so I know very little about what's going on. But it seems that either my Facebook contacts are even more clueless about the situation--or they do know but they just could not be bothered. And I guess my FB world reflects society-at-large, if netizen Kira's comment is any indication.<br />
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What can we do, indeed? Well, first we try not to surrender to a feeling of helplessness--or worse, apathy. The least we can do is <i>be aware, be concerned, and be informed</i>. Then we can start having conversations about the topic: online, offline, out of line, take your pick. And maybe only then can we be adequately equipped to take action and do whatever we think is best for ourselves, for our families, for our country--in no particular order.</div>
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Kira's comment comes from <a href="http://momandpopmoments.com/2013/07/31/janet-napoles-pork-barrel-scam-theft-from-a-nation/" target="_blank">this post</a> about the Janet Napoles case in the blog "Mom and Pop Moments." The article itself is a good read, but you'll find some of the comments more <i>revealing</i>, to say the least. And perhaps the post is the best place to start. I'm not saying all the comments are accurate or sensible, but some are definitely worth reading because at least will make you think. And I believe it's worth saving some of these comments (there are others that I have deliberately excluded but are still worth reading, just scroll further down, you won't miss them), for posterity if nothing else.<br />
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Investor Juanhttp://www.blogger.com/profile/06304546864904571937noreply@blogger.comtag:blogger.com,1999:blog-5004589755220243665.post-56651878654468252142013-07-31T22:18:00.000+08:002013-07-31T22:18:24.787+08:00Free Life Insurance with BPI's Get Started Account<b>DEAR INVESTOR JUAN</b><br />
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<i>Dear Investor Juan,</i><br />
<i><br /></i>
<i>I have a question about insurance. I can't decide which of the two is a better option for my husband:</i><br />
<i><br /></i>
<i>Option 1.Term life insurance for 2 million coverage with premiums in the table below</i><br />
<i><br /></i>
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<i>Option 2: BPI's Get Started savings account with life insurance (5x your adb maxium of 2 million). My husband has 100,000 at present which function also as our emergency fund. I'm thaninking of putting in addition 300k so that my husbands coverage will be 2 million.</i><br />
<i><br /></i>
<i>Do you think its better to just do option 1 and invest 300k in uitf? or choose option 2 meaning total saving 400k with 2 million life insurance,at the same time it will funtion as our emergency fund?</i><br />
<i><br /></i>
<i>Please excuse my grammar and spelling as I have just given birth two days ago and in a hurry to write this as I would like to email you asap so to help me decide which option is better.</i><br />
<i><br /></i>
<i>Thanks,</i><br />
<i>Maxine</i><br />
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Dear Maxine,<br />
<br />
Thanks for your email and the very useful information that you have provided us.<br />
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The first thing I did was review the details and conditions for <a href="https://www.mybpimag.com/index.php?option=com_content&view=article&id=112&Itemid=142" target="_blank">BPI's Get Started</a> account. Everything seems to be above-board--it does offer free life insurance with no strings attached. The only possible drawbacks that I see are that <a href="https://www.mybpimag.com/index.php?option=com_content&view=article&id=896&Itemid=1052" target="_blank">only depositors who are 15 to 70 years old are entitled to free insurance</a> and the minimum monthly balance of 25,000 pesos for ATM accounts (75,000 for passbook) is higher than other kinds of accounts, but these are not deal breakers, in my opinion. Also, like other savings accounts <a href="http://info.bpiexpressonline.com/bpiprod/produpd.nsf/Deposit+Rates/DepositRates1" target="_blank">Get Started pays interest</a>, albeit at a paltry 0.25%, but I'm sure other banks offer around the same rate.<br />
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Thanks for sharing your insurance quotation, it's really helpful especially for people who don't have any idea how much life insurance costs in the Philippines. While the <i>annual</i> premiums are not very high, they are also not negligible. So based on your options (which you formulated correctly, by the way), to get a 2 million peso insurance coverage on the first year, you can either pay 7,900 to an insurer or maintain a 400,000 deposit in a Get Started account. I understand your hesitation in choosing Option 2--keeping 400,000 in a savings account seems to be a waste since it can possibly earn more in an equity fund? But if you can justify keeping 400,000 as an emergency fund--which to me is completely understandable, especially if it's for your entire household--parking the amount in an account that provides extra benefits makes a lot of sense.<br />
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How much more value is Get Started providing anyway? Using your insurance quotes, maintaining a 400,000 deposit in the account earns 0.25% interest and insurance that is worth 7,900 for the first year. Which means that your deposit would effectively be earning 0.25% + 7,900/400,000 = 2.225% in the first year. Given the interest rate climate nowadays, that rate is comparable to yields on T-bills and time deposit accounts--but with Get Started you don't lose liquidity, which is a necessary feature of an emergency fund. So yeah, Option 2, most definitely.<br />
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For other readers who think 400,000 is too high for an emergency fund, just figure out the amount that is appropriate to you and deposit that in a Get Started account. <br /><br />Finally, I make these recommendations based on the limited information that I have. If anyone knows comparable benefits offered by other banks, please do share the information with us.<br />
<br />Investor Juanhttp://www.blogger.com/profile/06304546864904571937noreply@blogger.comtag:blogger.com,1999:blog-5004589755220243665.post-88744976371805890432013-07-30T14:53:00.001+08:002013-07-30T14:54:55.341+08:00The Greatest Food in Human History? Sorry, Not in the PhilippinesAccording to <a href="http://www.freakonomics.com/2013/03/21/the-most-bountiful-food-in-human-history/" target="_blank">a Freakonomics reader</a> and this follow up <a href="http://www.nypost.com/p/news/opinion/opedcolumnists/the_greatest_food_human_history_5bikMtD5ZJ50x1KMCyGfTJ" target="_blank">New York Post article</a>, the McDouble--at 1 USD in the US (and 9 HKD in Hong Kong) and packing 390 Calories, 23 grams of protein (half a daily serving), 7% of daily fiber, 20% of daily calcium and iron, etc.,--"is the cheapest, most nutritious, and bountiful food that has ever existed in human history."<br />
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Sadly, for some reason, <a href="http://www.mcdonalds.com.ph/ourfood/view/burgers" target="_blank">we don't have a McDouble in the Philippines</a>. What we do have is the Double Cheeseburger, which for 99 PHP (or <a href="https://www.google.com/search?q=99+pesos+to+usd&oq=99+pesos+to+usd&aqs=chrome.0.69i57.4258j0&sourceid=chrome&ie=UTF-8#q=99%20PHP%20to%20USD&oq=99+pesos+to+usd&aqs=chrome.0.69i57.4258j0&sourceid=chrome&ie=UTF-8&bav=on.2,or.r_qf.&bvm=bv.49967636%2Cd.dGI%2Cpv.xjs.s.en_US.jOYpRJj4zMA.O&fp=f5a1e0105e9cf76&biw=1280&bih=856" target="_blank">2.28 USD</a>) you get a whopping extra slice of cheese more. For 1 USD, the best you can have is the Cheeseburger--if you can get over the sadness that one beef patty will inevitably bring. And we're only talking about burgers made of real meat here, so Burger McDo clearly does not count.</div>
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Investor Juanhttp://www.blogger.com/profile/06304546864904571937noreply@blogger.comtag:blogger.com,1999:blog-5004589755220243665.post-6536063448256915672013-07-28T17:09:00.000+08:002013-07-28T17:09:22.821+08:00Final Rules for ETFs Approved<b>IN THE NEWS</b> <i>from</i> <a href="http://www.philstar.com/business/2013/06/24/957407/sec-approves-final-rules-etfs">PhilStar.com</a><br /><br />
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The SEC has approved the final set of rules that would guide the offering of exchange traded funds or ETFs.<br />
<br /><a href="http://www.investorjuan.com/2010/11/5-things-you-need-to-know-about.html">ETFs are similar to other kinds of investment funds</a>, but unlike mutual funds and UITFs whose value are computed and posted daily by the issuer, the price of an ETF is determined by how much investors are willing to pay for (and sellers willing to receive for) its shares, just like stocks and other assets that are traded in exchanges.<br />
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ETFs are a good alternative to currently available investment funds because they are more liquid (easier to convert to cash) and ideally have lower costs.<br /><br />According to the article, at least three firms, First Metro Investment Corp., BDO Unibank Inc., and Bank of the Philippine Islands have expressed their plan to offer ETFs.<br />
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A copy of the rules may be found <a href="http://pse.com.ph/resource/memos/2013/CN_2013-0030.pdf">here</a>.<br />
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Many thanks to reader <a href="http://www.investorjuan.com/2012/10/etf-updates.html?showComment=1374130114861#c6128687418560566063">haezel</a> for the heads up.<br />
<br />Investor Juanhttp://www.blogger.com/profile/06304546864904571937noreply@blogger.comtag:blogger.com,1999:blog-5004589755220243665.post-41912831822608886412013-07-22T15:30:00.000+08:002013-07-22T15:30:19.719+08:00The DRREW Framework in Action<b>DEAR INVESTOR JUAN</b><br />
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<i>Dear Investor Juan,</i><br />
<i><br /></i>
<i>I have a few questions regarding investment. I'm a 24 yrs old, single and my current financial situation:</i><br />
<i>* Free of debt</i><br />
<i>* Emergency Fund (good for 6months of expenses)</i><br />
<i>* Life insurance and Health card (provided by my employer) </i><br />
<i><br /></i>
<i>Investment goals:</i><br />
<i>* Retirement Fund - invest in stocks (longterm), since I'm still 24</i><br />
<i>* Condo/House - I'm not yet decided on what to buy and I'm still searching for a nice place, but I want to prepare the money that I will use for buying my own place. For the meantime, I'm planning to put the money in Mutual Fund (Money Market Fund) since I'm not sure when I will be needing the money.</i><br />
<i>* Future Personal Expense - I'll be using this fund for 3-5 years from now, but I can't decide if I will put it in stocks or Mutual Fund (Equity Fund)</i><br />
<i><br /></i>
<i>Here are my questions:</i><br />
<i>1. Based on my current financial situation, do you think I can now proceed to my investment goals?</i><br />
<i>2. Is it okay to have a fund dedicated to each goals? </i><br />
<i>3. Since I have 3 funds to monitor, I'm thinking if it could be costly for maintaining the multiple funds because of the fees. I'm not sure if I'm doing it correctly or not.</i><br />
<i><br /></i>
<i>If you have any inputs to improve my goal, I am gladly to hear it :)</i><br />
<i><br /></i>
<i>Thank you.</i><br />
<i><br /></i>
<i>Best regards,</i><br />
<i>Jay</i><br />
<br />
<br />
Dear Jay,<br />
<br />
Dear Jay,<br />
<br />
I completely support your plan. This is exactly what I proposed in <a href="http://www.investorjuan.com/2013/05/an-introduction-to-drrew-framework.html" target="_blank">this post</a> about the "DRREW" framework. Congratulations--YOU GET IT. :)<br />
<br />
Here are my answers to your questions:<br />
<br />
<b>1. Based on my current financial situation, do you think I can now proceed to my investment goals?</b><br />
<br />
Yes. I assume that you already know what portions of your savings to allocate to your retirement fund, the property that you are planning to buy, and "future personal expenses."<br />
<br />
<b>2. Is it okay to have a fund dedicated to each goals? </b><br />
<br />
Since the three goals that you mentioned above involve different holding periods, funds for each <i>must</i> be invested in the appropriate type of asset or fund.<br />
<br />
<b>3. Since I have 3 funds to monitor, I'm thinking if it could be costly for maintaining the multiple funds because of the fees. I'm not sure if I'm doing it correctly or not.</b><br />
<br />
Nah, you won't have to pay more since fees are charged as a percentage of the value of your investment--so given the same fee percentage, investing 900,000 in one fund would result in the same fee as investing in three separate funds of 300,000 each. Also, if you do it right you don't really have to monitor anything since your decision to sell or divest should be solely determined by need and not by how much money you are making or losing. To minimize hassle, though, you may want to buy funds from just one bank.<br />
<br />
I have nothing more to add, really, given what I know about you situation. Thanks for your email, and good luck!<br />
<br />Investor Juanhttp://www.blogger.com/profile/06304546864904571937noreply@blogger.comtag:blogger.com,1999:blog-5004589755220243665.post-8089422404429829562013-07-19T16:06:00.001+08:002013-07-19T16:06:33.782+08:00How Much Does it Cost to be Your Favorite Superhero IRL? Inflation from Different Angles<b>PERSONAL FINANCE 101</b><br />
<br />
A friend shared these interesting infographics with me:<br />
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgTzlN6KmP3-fjtBTbduI5-Xi6nuxjgQ_D1LpCgt_klwPwEGdUZXj46U-_UjbWdO0QthfyibXdxd5JR92oj-J5DCLg_MORuIJvG6vO2PiTNlidO8pbkdnQiQs0lTNSq8NPkfQ__Ax17fi8/s1600/batman-infographic.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgTzlN6KmP3-fjtBTbduI5-Xi6nuxjgQ_D1LpCgt_klwPwEGdUZXj46U-_UjbWdO0QthfyibXdxd5JR92oj-J5DCLg_MORuIJvG6vO2PiTNlidO8pbkdnQiQs0lTNSq8NPkfQ__Ax17fi8/s640/batman-infographic.jpg" width="339" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><a href="http://mashable.com/2013/07/16/batman-price-infographic/" target="_blank"><i>How much does it cost to be Batman in real life?</i></a></td></tr>
</tbody></table>
<div class="separator" style="clear: both; text-align: center;">
<br /></div>
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgFArDHvvD5lThOJ_tEDQuR2TQnpH68cOd2dStW128UNFBhyHu2pSToyUo8w8588DIB5SLdBg2pe-DVMge2B6FJeLa1oM2k5MygzwXFICrp71zNTjsBzz8tWLiPJn0tuUusXkZ0YRIXrGI/s1600/How-much-Does-it-cost-being-spiderman.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgFArDHvvD5lThOJ_tEDQuR2TQnpH68cOd2dStW128UNFBhyHu2pSToyUo8w8588DIB5SLdBg2pe-DVMge2B6FJeLa1oM2k5MygzwXFICrp71zNTjsBzz8tWLiPJn0tuUusXkZ0YRIXrGI/s640/How-much-Does-it-cost-being-spiderman.jpg" width="380" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><i><a href="http://mashable.com/2013/07/15/spider-man-infographic/" target="_blank">How much does it cost to be Spider-man in real life?</a></i></td></tr>
</tbody></table>
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhIfzklsKWeWADoduD7lUo1fwZO82crbaNlB4Nee-TTE7W2P97IHh0N9vqUgw3Q62Xf80TmV_B7UcWG97mE4WFwG6RNi-9j6F3V4_KcuqMkZYy1oXYLQf4U6jkL-yb5vPmxzyc7gy0V17c/s1600/Hulk-Infographic.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhIfzklsKWeWADoduD7lUo1fwZO82crbaNlB4Nee-TTE7W2P97IHh0N9vqUgw3Q62Xf80TmV_B7UcWG97mE4WFwG6RNi-9j6F3V4_KcuqMkZYy1oXYLQf4U6jkL-yb5vPmxzyc7gy0V17c/s640/Hulk-Infographic.jpg" width="339" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><i><a href="http://mashable.com/2013/07/17/hulk-price-infographic/" target="_blank">How much does it cost to be the Hulk in real life?</a></i></td></tr>
</tbody></table>
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhxLOksqNSTxoPMzBqEyh6JXbDvLX__ml6ijRN00D1V1-QHH2Q-PF-jVF1Hei-yToqR1F35Ja8t3uk2jDSLsjt46P29L7md30MvJ4AGZuHbU5AZTgShqPAZVeA4QgD9aq_-dq7H5b31qYw/s1600/Superman-Infographic-Updated.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhxLOksqNSTxoPMzBqEyh6JXbDvLX__ml6ijRN00D1V1-QHH2Q-PF-jVF1Hei-yToqR1F35Ja8t3uk2jDSLsjt46P29L7md30MvJ4AGZuHbU5AZTgShqPAZVeA4QgD9aq_-dq7H5b31qYw/s640/Superman-Infographic-Updated.jpg" width="356" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><i><a href="http://mashable.com/2013/07/18/superman-price-infographic/" target="_blank">How much does it cost to be Superman in real life?</a></i></td></tr>
</tbody></table>
<br />
So it seems that even our favorite superheroes are not immune from the ravages of time--and inflation. Looks pretty bad, doesn't it? But <i>how </i>bad, exactly? How much inflation have our justice friends suffered through in the past several decades?<br />
<br />
Say, P is the price of a certain product now, and Px the price of the same product x years ago. The compounded average annual change in price of the product--i.e., the inflation rate with respect to the product--is:<br />
<br />
<div style="text-align: center;">
[(Px/P)^(1/x)] - 1</div>
<br />
Let's try applying this formula to some of the items in the infographics above (since we can only use the formula for the prices of the same item, we can't use it for Batman's expenses and Spider-man's residence expense, for example).<br />
<br />
<table border="0" cellpadding="0" cellspacing="0" class="MsoNormalTable" style="border-collapse: collapse; margin-left: 4.7pt; text-align: center; width: 464px;">
<tbody>
<tr style="height: 30.0pt; mso-yfti-firstrow: yes; mso-yfti-irow: 0;">
<td nowrap="" style="border: solid windowtext 1.0pt; height: 30.0pt; mso-border-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 59.0pt;" valign="bottom" width="79"><div class="MsoNormal">
<b>Superhero<o:p></o:p></b></div>
</td>
<td nowrap="" style="border-left: none; border: solid windowtext 1.0pt; height: 30.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 69.3pt;" valign="bottom" width="92"><div class="MsoNormal">
<b>Item<o:p></o:p></b></div>
</td>
<td nowrap="" style="border-left: none; border: solid windowtext 1.0pt; height: 30.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 49.6pt;" valign="bottom" width="66"><div class="MsoNormal">
<b>Px<o:p></o:p></b></div>
</td>
<td nowrap="" style="border-left: none; border: solid windowtext 1.0pt; height: 30.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 49.6pt;" valign="bottom" width="66"><div class="MsoNormal">
<b>P<o:p></o:p></b></div>
</td>
<td nowrap="" style="border-left: none; border: solid windowtext 1.0pt; height: 30.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 35.45pt;" valign="bottom" width="47"><div class="MsoNormal">
<b>From<o:p></o:p></b></div>
</td>
<td nowrap="" style="border-left: none; border: solid windowtext 1.0pt; height: 30.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 35.45pt;" valign="bottom" width="47"><div class="MsoNormal">
<b>To<o:p></o:p></b></div>
</td>
<td style="border-left: none; border: solid windowtext 1.0pt; height: 30.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 49.6pt;" valign="bottom" width="66"><div class="MsoNormal">
<b><span style="font-size: 10pt;">(Implied)
<br />
Inflation</span></b><b><o:p></o:p></b></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 1;">
<td nowrap="" style="border-top: none; border: solid windowtext 1.0pt; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 59.0pt;" valign="bottom" width="79"><div class="MsoNormal">
Spider-man<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 69.3pt;" valign="bottom" width="92"><div class="MsoNormal">
Suit<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 49.6pt;" valign="bottom" width="66"><div align="right" class="MsoNormal" style="text-align: right;">
193<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 49.6pt;" valign="bottom" width="66"><div align="right" class="MsoNormal" style="text-align: right;">
265<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 35.45pt;" valign="bottom" width="47"><div align="right" class="MsoNormal" style="text-align: right;">
1962<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 35.45pt;" valign="bottom" width="47"><div align="right" class="MsoNormal" style="text-align: right;">
2013<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 49.6pt;" valign="bottom" width="66"><div align="right" class="MsoNormal" style="text-align: right;">
0.62%<o:p></o:p></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 2;">
<td nowrap="" style="border-top: none; border: solid windowtext 1.0pt; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 59.0pt;" valign="bottom" width="79"><div class="MsoNormal">
Spider-man<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 69.3pt;" valign="bottom" width="92"><div class="MsoNormal">
Date<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 49.6pt;" valign="bottom" width="66"><div align="right" class="MsoNormal" style="text-align: right;">
780<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 49.6pt;" valign="bottom" width="66"><div align="right" class="MsoNormal" style="text-align: right;">
3,299<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 35.45pt;" valign="bottom" width="47"><div align="right" class="MsoNormal" style="text-align: right;">
1962<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 35.45pt;" valign="bottom" width="47"><div align="right" class="MsoNormal" style="text-align: right;">
2013<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 49.6pt;" valign="bottom" width="66"><div align="right" class="MsoNormal" style="text-align: right;">
2.87%<o:p></o:p></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 3;">
<td nowrap="" style="border-top: none; border: solid windowtext 1.0pt; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 59.0pt;" valign="bottom" width="79"><div class="MsoNormal">
Hulk<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 69.3pt;" valign="bottom" width="92"><div class="MsoNormal">
Undergrad<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 49.6pt;" valign="bottom" width="66"><div align="right" class="MsoNormal" style="text-align: right;">
11,080<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 49.6pt;" valign="bottom" width="66"><div align="right" class="MsoNormal" style="text-align: right;">
183,560<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 35.45pt;" valign="bottom" width="47"><div align="right" class="MsoNormal" style="text-align: right;">
1962<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 35.45pt;" valign="bottom" width="47"><div align="right" class="MsoNormal" style="text-align: right;">
2013<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 49.6pt;" valign="bottom" width="66"><div align="right" class="MsoNormal" style="text-align: right;">
5.66%<o:p></o:p></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 4;">
<td nowrap="" style="border-top: none; border: solid windowtext 1.0pt; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 59.0pt;" valign="bottom" width="79"><div class="MsoNormal">
Hulk<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 69.3pt;" valign="bottom" width="92"><div class="MsoNormal">
PhD<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 49.6pt;" valign="bottom" width="66"><div align="right" class="MsoNormal" style="text-align: right;">
25,430<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 49.6pt;" valign="bottom" width="66"><div align="right" class="MsoNormal" style="text-align: right;">
190,420<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 35.45pt;" valign="bottom" width="47"><div align="right" class="MsoNormal" style="text-align: right;">
1962<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 35.45pt;" valign="bottom" width="47"><div align="right" class="MsoNormal" style="text-align: right;">
2013<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 49.6pt;" valign="bottom" width="66"><div align="right" class="MsoNormal" style="text-align: right;">
4.03%<o:p></o:p></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 5;">
<td nowrap="" style="border-top: none; border: solid windowtext 1.0pt; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 59.0pt;" valign="bottom" width="79"><div class="MsoNormal">
Hulk<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 69.3pt;" valign="bottom" width="92"><div class="MsoNormal">
Psychologist<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 49.6pt;" valign="bottom" width="66"><div align="right" class="MsoNormal" style="text-align: right;">
7,852<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 49.6pt;" valign="bottom" width="66"><div align="right" class="MsoNormal" style="text-align: right;">
15,600<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 35.45pt;" valign="bottom" width="47"><div align="right" class="MsoNormal" style="text-align: right;">
1962<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 35.45pt;" valign="bottom" width="47"><div align="right" class="MsoNormal" style="text-align: right;">
2013<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 49.6pt;" valign="bottom" width="66"><div align="right" class="MsoNormal" style="text-align: right;">
1.36%<o:p></o:p></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 6;">
<td nowrap="" style="border-top: none; border: solid windowtext 1.0pt; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 59.0pt;" valign="bottom" width="79"><div class="MsoNormal">
Hulk<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 69.3pt;" valign="bottom" width="92"><div class="MsoNormal">
Clothing<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 49.6pt;" valign="bottom" width="66"><div align="right" class="MsoNormal" style="text-align: right;">
450<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 49.6pt;" valign="bottom" width="66"><div align="right" class="MsoNormal" style="text-align: right;">
4,160<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 35.45pt;" valign="bottom" width="47"><div align="right" class="MsoNormal" style="text-align: right;">
1962<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 35.45pt;" valign="bottom" width="47"><div align="right" class="MsoNormal" style="text-align: right;">
2013<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 49.6pt;" valign="bottom" width="66"><div align="right" class="MsoNormal" style="text-align: right;">
4.46%<o:p></o:p></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 7;">
<td nowrap="" style="border-top: none; border: solid windowtext 1.0pt; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 59.0pt;" valign="bottom" width="79"><div class="MsoNormal">
Superman<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 69.3pt;" valign="bottom" width="92"><div class="MsoNormal">
Apartment<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 49.6pt;" valign="bottom" width="66"><div align="right" class="MsoNormal" style="text-align: right;">
800<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 49.6pt;" valign="bottom" width="66"><div align="right" class="MsoNormal" style="text-align: right;">
24,000<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 35.45pt;" valign="bottom" width="47"><div align="right" class="MsoNormal" style="text-align: right;">
1938<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 35.45pt;" valign="bottom" width="47"><div align="right" class="MsoNormal" style="text-align: right;">
2013<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 49.6pt;" valign="bottom" width="66"><div align="right" class="MsoNormal" style="text-align: right;">
4.64%<o:p></o:p></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 8;">
<td nowrap="" style="border-top: none; border: solid windowtext 1.0pt; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 59.0pt;" valign="bottom" width="79"><div class="MsoNormal">
Superman<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 69.3pt;" valign="bottom" width="92"><div class="MsoNormal">
Eyeglasses<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 49.6pt;" valign="bottom" width="66"><div align="right" class="MsoNormal" style="text-align: right;">
10<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 49.6pt;" valign="bottom" width="66"><div align="right" class="MsoNormal" style="text-align: right;">
95<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 35.45pt;" valign="bottom" width="47"><div align="right" class="MsoNormal" style="text-align: right;">
1938<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 35.45pt;" valign="bottom" width="47"><div align="right" class="MsoNormal" style="text-align: right;">
2013<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 49.6pt;" valign="bottom" width="66"><div align="right" class="MsoNormal" style="text-align: right;">
3.05%<o:p></o:p></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 9;">
<td nowrap="" style="border-top: none; border: solid windowtext 1.0pt; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 59.0pt;" valign="bottom" width="79"><div class="MsoNormal">
Superman<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 69.3pt;" valign="bottom" width="92"><div class="MsoNormal">
Suit<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 49.6pt;" valign="bottom" width="66"><div align="right" class="MsoNormal" style="text-align: right;">
30<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 49.6pt;" valign="bottom" width="66"><div align="right" class="MsoNormal" style="text-align: right;">
1,510<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 35.45pt;" valign="bottom" width="47"><div align="right" class="MsoNormal" style="text-align: right;">
1938<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 35.45pt;" valign="bottom" width="47"><div align="right" class="MsoNormal" style="text-align: right;">
2013<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 49.6pt;" valign="bottom" width="66"><div align="right" class="MsoNormal" style="text-align: right;">
5.36%<o:p></o:p></div>
</td>
</tr>
<tr style="height: 15.0pt; mso-yfti-irow: 10; mso-yfti-lastrow: yes;">
<td nowrap="" style="border-top: none; border: solid windowtext 1.0pt; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 59.0pt;" valign="bottom" width="79"><div class="MsoNormal">
Superman<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 69.3pt;" valign="bottom" width="92"><div class="MsoNormal">
Subway fare<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 49.6pt;" valign="bottom" width="66"><div align="right" class="MsoNormal" style="text-align: right;">
36<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 49.6pt;" valign="bottom" width="66"><div align="right" class="MsoNormal" style="text-align: right;">
1,344<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 35.45pt;" valign="bottom" width="47"><div align="right" class="MsoNormal" style="text-align: right;">
1938<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 35.45pt;" valign="bottom" width="47"><div align="right" class="MsoNormal" style="text-align: right;">
2013<o:p></o:p></div>
</td>
<td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 15.0pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0cm 5.4pt 0cm 5.4pt; width: 49.6pt;" valign="bottom" width="66"><div align="right" class="MsoNormal" style="text-align: right;">
4.94%<o:p></o:p></div>
</td>
</tr>
</tbody></table>
<br />
Given that the inflation rate in different parts of the world has behaved this way since 1986 (have purposely excluded the 50% jump in prices in the Philippines in 1984):<br />
<div>
<br /></div>
<div>
</div>
<div style="text-align: center;">
<iframe frameborder="0" height="325" marginheight="0" marginwidth="0" scrolling="no" src="http://www.google.com/publicdata/embed?ds=d5bncppjof8f9_&ctype=l&strail=false&bcs=d&nselm=h&met_y=ny_gdp_defl_kd_zg&fdim_y=inflation_type:1&scale_y=lin&ind_y=false&rdim=region&idim=country:PHL:HKG:USA&ifdim=region&tdim=true&tstart=522086400000&tend=1311004800000&hl=en_US&dl=en_US&ind=false&xMax=-53.09249749999992&xMin=-0.3581224999999222&yMax=-70.40390803876906&yMin=72.99990815478738&mapType=t&icfg&iconSize=0.5" width="500"></iframe></div>
<div style="text-align: center;">
<br /></div>
<div style="text-align: left;">
<br /></div>
<div style="text-align: left;">
And you hear statistics like <a href="http://newsinfo.inquirer.net/416021/903-primary-secondary-schools-354-colleges-universities-hike-tuition" target="_blank">these</a> from CHEd:</div>
<div style="text-align: left;">
<br /></div>
<div style="text-align: left;">
<br /></div>
<i>CHEd said that on the average, tuition would increase by P37.45 per unit or by <b>8.5 per cent, the lowest percentage increase in the last 10 years.</b></i><br />
<i><b><br /></b></i>
<i>The national average increase in school fees is P194.62 or by 7.58 per cent, according to CHEd.</i><br />
<br />
<br />
Cost-wise, being a superhero may not be so bad, after all. Large changes in price over a long period of time may seem much at first glance, but really reasonable upon closer inspection.<br />
<br />
Although it's also perfectly understandable to interpret this as "reasonable annual changes in price translate to <i>insane</i> price differences over a long period of time." It's just a matter of perspective, really. And compounding completely playing tricks with our minds.<br />
<br />Investor Juanhttp://www.blogger.com/profile/06304546864904571937noreply@blogger.comtag:blogger.com,1999:blog-5004589755220243665.post-89608256101129526732013-07-17T19:07:00.000+08:002013-07-17T19:07:08.488+08:00Making Linux Work on Your PC, Part 2: Productivity and Gaming<div class="separator" style="clear: both; text-align: center;">
<a href="https://dt8kf6553cww8.cloudfront.net/static/images/hugbox-vflOIcRDa.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="223" src="https://dt8kf6553cww8.cloudfront.net/static/images/hugbox-vflOIcRDa.png" width="400" /></a></div>
<br />
If you have decided to give Linux a try as I talked about in <a href="http://www.investorjuan.com/2013/06/making-linux-work-on-your-pc-part-1.html" target="_blank">Part 1</a>, there are a couple more things that you can do to get more out of your Linux machine and lessen your dependence on Windows.<br />
<br />
While Linux comes preinstalled with perfectly usable (and in certain aspects, better) open source alternatives to commercial software (e.g., <a href="https://www.libreoffice.org/" target="_blank">Libre Office</a> for MS Office and <a href="http://www.gimp.org/" target="_blank">GIMP</a> for Adobe Photoshop), I recommend that you install several more applications to enhance your Linux experience.<br />
<br />
<b>Chromium</b><br />
<br />
Even if Firefox is preinstalled in Linux Mint, I strongly suggest installing and using <a href="http://www.chromium.org/Home" target="_blank">Chromium</a>, the open source version of Google's infinitely-better Chrome web browser. Installing Chromium is easy: just go to Menu > Software Manager, search "chromium" in the search bar, and then install.<br />
<br />
One minor issue that you may have with Chromium on Mint is the custom Google search behind the omnibox. <a href="http://forums.linuxmint.com/viewtopic.php?f=6&t=124276" target="_blank">To revert to the default version of Google</a>, just click the Menu > Terminal and type and enter:<br />
<br />
<i>sudo rm -fr /etc/skel/.config/chromium ~/.config/chromium</i><br />
<br />
<b>Dropbox</b><br />
<br />
<a href="https://www.dropbox.com/" target="_blank">Dropbox</a> is a handy tool that lets you automatically sync selected files and folders across different machines and different platforms--perfect if you use a different machine at work and at home, or if you want ready access to your files via your mobile phone.<br />
<br />
First, create a free account on the Dropbox website (or pay a fee if you want more cloud storage space). Then install Dropbox by downloading the <a href="https://www.dropbox.com/install?os=lnx" target="_blank">Ubuntu installer</a> (choose 32- or 64-bit depending on what kind of system you have). Next, go to Menu > System Tools > GDebi Package Installer and open the *.deb file that you just downloaded to install. Find the Dropbox button under Menu > Internet (or use the search bar in Menu), click it, and log in to connect your Linux PC to your Dropbox account.<br />
<br />
<b>Everpad</b><br />
<br />
Everpad is the Linux port of <a href="https://evernote.com/" target="_blank">Evernote</a>, the cloud-based note-taking software. <a href="https://github.com/nvbn/everpad/wiki/how-to-install" target="_blank">To install</a>, run the following lines (one at a time) in the terminal:<br />
<br />
<i>sudo add-apt-repository ppa:nvbn-rm/ppa</i><br />
<i>sudo apt-get update</i><br />
<i>sudo apt-get install everpad</i><br />
<br />
<b>Picasa</b><br />
<br />
Picasa is a free and user-friendly tool for storing, managing, and editing photos. Install by searching "picasa" in Software Manager.<br />
<br />
<b>Steam</b><br />
<br />
Steam may be the one application that will eventually take Linux to the mainstream. Steam is a platform for buying and playing games for Windows, Mac, and now, Linux machines--kinda like iTunes, but for games. While not every Steam game is currently available to play on Linux, <a href="http://store.steampowered.com/browse/linux/" target="_blank">the list</a>--which includes Amnesia, Portal, Half Life 2, Team Fortress 2, and almost all <a href="https://www.humblebundle.com/" target="_blank">Humble Bundle</a> games--will just get longer over time.<br />
<br />
To install, go to the <a href="http://store.steampowered.com/about/" target="_blank">Steam website</a> and download the *.deb package. Same as with Dropbox above, use GDebi Package Installer to open the file and install the application.<br />
<br />
<b>Other software</b><br />
<br />
There are some other open source software applications in Software Manager that you may be interested in. I have started learning <a href="http://librecad.org/cms/home.html" target="_blank">LibreCAD</a> (an AutoCAD alternative) for 2D designs and I plan to learn how to make 3D models using <a href="http://www.blender.org/" target="_blank">Blender</a> in the near future.<br />
<br />
Linux is slowly turning out to be a viable alternative to Windows and even Mac. While it's still not perfect, it's more than enough for most of our needs, and it just gets better with each passing year. With these series of guides, I hope that I was able to convince at least some of you to give Linux a try.<br />
<br />Investor Juanhttp://www.blogger.com/profile/06304546864904571937noreply@blogger.comtag:blogger.com,1999:blog-5004589755220243665.post-17153630664884042342013-07-13T19:12:00.000+08:002013-07-13T19:12:02.836+08:00The Solution to Being a Shopaholic<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiECShs1CqN0j7j_9u-YxIldBYdeXIY3saD_KAUeKNeBKzK_MBpchByZ4fOpLESFAEjDQGG4rdSKdpJYCER45JgjRuu0mtWqy3WFzqwcX4Ip2arJtXKXI-QYz_Oc8fcHyNboOlIFCGYCNE/s1600/XForex.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="230" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiECShs1CqN0j7j_9u-YxIldBYdeXIY3saD_KAUeKNeBKzK_MBpchByZ4fOpLESFAEjDQGG4rdSKdpJYCER45JgjRuu0mtWqy3WFzqwcX4Ip2arJtXKXI-QYz_Oc8fcHyNboOlIFCGYCNE/s400/XForex.png" width="400" /></a></div>
<br />
This is irresponsible, misleading, and in my opinion, unethical advertising.<br />
<br />
But I must admit, it is entertaining. "Christine's" story is chock-full of lols.<br />
<br />Investor Juanhttp://www.blogger.com/profile/06304546864904571937noreply@blogger.comtag:blogger.com,1999:blog-5004589755220243665.post-87239265524386846512013-07-10T11:28:00.002+08:002013-07-10T14:22:04.151+08:00Why Even a 0.5% Difference in Fees Matters<b>DEAR INVESTOR JUAN</b><br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjbVk_INpUTm7kOO8bqOMK_st06suZMKEKx0O3R8i0vL0pcUfEkXLVn45k54u8Ur-xBrT5sAYZUA5tgmL8_e6jacVU6U4OuDwG6sADQb5-CpTSOecWq1v_XqmTc_gi7rJOvieFABJ8LFqQ/s1600/dilbert+mutual+fund.gif" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="125" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjbVk_INpUTm7kOO8bqOMK_st06suZMKEKx0O3R8i0vL0pcUfEkXLVn45k54u8Ur-xBrT5sAYZUA5tgmL8_e6jacVU6U4OuDwG6sADQb5-CpTSOecWq1v_XqmTc_gi7rJOvieFABJ8LFqQ/s400/dilbert+mutual+fund.gif" width="400" /></a></div>
<br />
<i>Dear Investor Juan,</i><br />
<i><br /></i>
<i>Your blog is really a good find and very helpful for educating newbies. Thank you very much! Now I am seeking some opinion from you. While checking the UITFs of BDO, BPI and Metrobank, I came to know that BDO have the lowest fee - 1% while Metrobank charges the most at 2% plus others. Am I correct in this or I am missing something?</i><br />
<i><br /></i>
<i>Regards,</i><br />
<i>Jovy</i><br />
<div>
<br /></div>
<div>
<br /></div>
<div>
Dear Jovy,</div>
<div>
<br /></div>
<div>
Perfect timing, I've been planning to discuss the effect of differences in fees in investment returns. Maybe this illustration can help convince you that even a "small" difference in management fee matters.</div>
<div>
<br /></div>
Say there are two equity funds (UITF or mutual fund), A and B. The returns of the two funds, before management fees, in years t = 1, 2, 3... are as follows:<br />
<br />
<i>Fund A:</i><br />
<br />
rA1, rA2, rA3, ...<br />
<br />
<i>Fund B:</i><br />
<br />
rB1, rB2, rB3, ...<br />
<br />
So that after 1 year, an investment in A will have grown by 1 + rA1 times, in 2 years by (1 + rA1)(1 + rA2) times, in five years by (1 + rA1)(1 + rA2)(1 + rA3)(1 + rA4)(1 + rA5), and so on.<br />
<br />
If A charges an annual management or trust fee of 1%, then the after-fee value of an investment in A after 1, 2, and 5 years are:<br />
<br />
After 1 year: (1 + rA1)*(1 - 1%) = (1 + rA1)*<b>0.99</b><br />
After 2 years: (1 + rA1)*0.99*(1 + rA2)*0.99 = (1 + rA1)(1 + rA2)*<b>0.99^2</b><br />
After 5 years: (1 + rA1)(1 + rA2)(1 + rA3)(1 + rA4)(1 + rA5)*<b>0.99^5 = </b>(1 + rA1)(1 + rA2)(1 + rA3)(1 + rA4)(1 + rA5)*<b>0.95</b><br />
<br />
Which means that if you invest in the fund for 5 years, 5% of the value of your investment would go to management fees. And if you invest in A for 30 years, your investment will have the following value at the end of the period:<br />
<br />
(1 + rA1)(1 + rA2)...(1 + rA30)*<b>0.99^30</b> = (1 + rA1)(1 + rA2)...(1 + rA30)*<b>0.74</b><br />
<br />
Let's say B charges a 1.5% management fee. A 30-year investment in the fund would result in:<br />
<br />
(1 + rB1)(1 + rB2)...(1 + rB30)*<b>0.985^30</b> = (1 + rB1)(1 + rB2)...(1 + rB30)*<b>0.64</b><br />
<br />
Assuming that the performance of an equity fund <a href="http://www.investorjuan.com/2010/06/luck-is-key-to-success-for-most-top.html" target="_blank">does not depend on the skill of the fund manager</a> so that the long-term return (e.g., 30 years) of two equity funds on any given year is the same,<br />
<br />
(1 + rA1)(1 + rA2)...(1 + rA30) = (1 + rB1)(1 + rB2)...(1 + rB30)<br />
<br />
This means that compared to a fund that charges 1% per year, investing in one that charges 1.5% results in a 14% loss in value (0.64/0.74 - 1) over a 30-year holding period.<br />
<br />
The table below compares the effects on value of different combinations of fees and holding periods.<br />
<br />
<table border="0" cellspacing="0" cols="7" style="text-align: center;">
<colgroup width="112"></colgroup>
<colgroup span="6" width="74"></colgroup>
<tbody>
<tr>
<td align="LEFT" height="16" style="border-bottom: 1px solid #000000; border-left: 1px solid #000000; border-right: 1px solid #000000; border-top: 1px solid #000000;"><b>Holding period</b></td>
<td align="RIGHT" sdnum="15369;0;0.00%" sdval="0.01" style="border-bottom: 1px solid #000000; border-left: 1px solid #000000; border-right: 1px solid #000000; border-top: 1px solid #000000;"><b>1.00%</b></td>
<td align="RIGHT" sdnum="15369;0;0.00%" sdval="0.015" style="border-bottom: 1px solid #000000; border-left: 1px solid #000000; border-right: 1px solid #000000; border-top: 1px solid #000000;"><b>1.50%</b></td>
<td align="RIGHT" sdnum="15369;0;0.00%" sdval="0.02" style="border-bottom: 1px solid #000000; border-left: 1px solid #000000; border-right: 1px solid #000000; border-top: 1px solid #000000;"><b>2.00%</b></td>
<td align="RIGHT" sdnum="15369;0;0.00%" sdval="0.03" style="border-bottom: 1px solid #000000; border-left: 1px solid #000000; border-right: 1px solid #000000; border-top: 1px solid #000000;"><b>3.00%</b></td>
<td align="RIGHT" sdnum="15369;0;0.00%" sdval="0.04" style="border-bottom: 1px solid #000000; border-left: 1px solid #000000; border-right: 1px solid #000000; border-top: 1px solid #000000;"><b>4.00%</b></td>
<td align="RIGHT" sdnum="15369;0;0.00%" sdval="0.05" style="border-bottom: 1px solid #000000; border-left: 1px solid #000000; border-right: 1px solid #000000; border-top: 1px solid #000000;"><b>5.00%</b></td>
</tr>
<tr>
<td align="RIGHT" height="16" sdnum="15369;" sdval="5" style="border-bottom: 1px solid #000000; border-left: 1px solid #000000; border-right: 1px solid #000000; border-top: 1px solid #000000;"><b>5</b></td>
<td align="RIGHT" sdnum="15369;0;#,###.0000" sdval="0.9509900499" style="border-bottom: 1px solid #000000; border-left: 1px solid #000000; border-right: 1px solid #000000; border-top: 1px solid #000000;">.9510</td>
<td align="RIGHT" sdnum="15369;0;#,###.0000" sdval="0.927216502365625" style="border-bottom: 1px solid #000000; border-left: 1px solid #000000; border-right: 1px solid #000000; border-top: 1px solid #000000;">.9272</td>
<td align="RIGHT" sdnum="15369;0;#,###.0000" sdval="0.9039207968" style="border-bottom: 1px solid #000000; border-left: 1px solid #000000; border-right: 1px solid #000000; border-top: 1px solid #000000;">.9039</td>
<td align="RIGHT" sdnum="15369;0;#,###.0000" sdval="0.8587340257" style="border-bottom: 1px solid #000000; border-left: 1px solid #000000; border-right: 1px solid #000000; border-top: 1px solid #000000;">.8587</td>
<td align="RIGHT" sdnum="15369;0;#,###.0000" sdval="0.8153726976" style="border-bottom: 1px solid #000000; border-left: 1px solid #000000; border-right: 1px solid #000000; border-top: 1px solid #000000;">.8154</td>
<td align="RIGHT" sdnum="15369;0;#,###.0000" sdval="0.7737809375" style="border-bottom: 1px solid #000000; border-left: 1px solid #000000; border-right: 1px solid #000000; border-top: 1px solid #000000;">.7738</td>
</tr>
<tr>
<td align="RIGHT" height="16" sdnum="15369;" sdval="10" style="border-bottom: 1px solid #000000; border-left: 1px solid #000000; border-right: 1px solid #000000; border-top: 1px solid #000000;"><b>10</b></td>
<td align="RIGHT" sdnum="15369;0;#,###.0000" sdval="0.904382075008804" style="border-bottom: 1px solid #000000; border-left: 1px solid #000000; border-right: 1px solid #000000; border-top: 1px solid #000000;">.9044</td>
<td align="RIGHT" sdnum="15369;0;#,###.0000" sdval="0.859730442259143" style="border-bottom: 1px solid #000000; border-left: 1px solid #000000; border-right: 1px solid #000000; border-top: 1px solid #000000;">.8597</td>
<td align="RIGHT" sdnum="15369;0;#,###.0000" sdval="0.817072806887547" style="border-bottom: 1px solid #000000; border-left: 1px solid #000000; border-right: 1px solid #000000; border-top: 1px solid #000000;">.8171</td>
<td align="RIGHT" sdnum="15369;0;#,###.0000" sdval="0.737424126894928" style="border-bottom: 1px solid #000000; border-left: 1px solid #000000; border-right: 1px solid #000000; border-top: 1px solid #000000;">.7374</td>
<td align="RIGHT" sdnum="15369;0;#,###.0000" sdval="0.664832635991501" style="border-bottom: 1px solid #000000; border-left: 1px solid #000000; border-right: 1px solid #000000; border-top: 1px solid #000000;">.6648</td>
<td align="RIGHT" sdnum="15369;0;#,###.0000" sdval="0.598736939238379" style="border-bottom: 1px solid #000000; border-left: 1px solid #000000; border-right: 1px solid #000000; border-top: 1px solid #000000;">.5987</td>
</tr>
<tr>
<td align="RIGHT" height="16" sdnum="15369;" sdval="20" style="border-bottom: 1px solid #000000; border-left: 1px solid #000000; border-right: 1px solid #000000; border-top: 1px solid #000000;"><b>20</b></td>
<td align="RIGHT" sdnum="15369;0;#,###.0000" sdval="0.817906937597231" style="border-bottom: 1px solid #000000; border-left: 1px solid #000000; border-right: 1px solid #000000; border-top: 1px solid #000000;">.8179</td>
<td align="RIGHT" sdnum="15369;0;#,###.0000" sdval="0.739136433347102" style="border-bottom: 1px solid #000000; border-left: 1px solid #000000; border-right: 1px solid #000000; border-top: 1px solid #000000;">.7391</td>
<td align="RIGHT" sdnum="15369;0;#,###.0000" sdval="0.667607971755094" style="border-bottom: 1px solid #000000; border-left: 1px solid #000000; border-right: 1px solid #000000; border-top: 1px solid #000000;">.6676</td>
<td align="RIGHT" sdnum="15369;0;#,###.0000" sdval="0.543794342926747" style="border-bottom: 1px solid #000000; border-left: 1px solid #000000; border-right: 1px solid #000000; border-top: 1px solid #000000;">.5438</td>
<td align="RIGHT" sdnum="15369;0;#,###.0000" sdval="0.442002433879407" style="border-bottom: 1px solid #000000; border-left: 1px solid #000000; border-right: 1px solid #000000; border-top: 1px solid #000000;">.4420</td>
<td align="RIGHT" sdnum="15369;0;#,###.0000" sdval="0.358485922408542" style="border-bottom: 1px solid #000000; border-left: 1px solid #000000; border-right: 1px solid #000000; border-top: 1px solid #000000;">.3585</td>
</tr>
<tr>
<td align="RIGHT" height="16" sdnum="15369;" sdval="30" style="border-bottom: 1px solid #000000; border-left: 1px solid #000000; border-right: 1px solid #000000; border-top: 1px solid #000000;"><b>30</b></td>
<td align="RIGHT" sdnum="15369;0;#,###.0000" sdval="0.73970037338828" style="border-bottom: 1px solid #000000; border-left: 1px solid #000000; border-right: 1px solid #000000; border-top: 1px solid #000000;">.7397</td>
<td align="RIGHT" sdnum="15369;0;#,###.0000" sdval="0.635458092731349" style="border-bottom: 1px solid #000000; border-left: 1px solid #000000; border-right: 1px solid #000000; border-top: 1px solid #000000;">.6355</td>
<td align="RIGHT" sdnum="15369;0;#,###.0000" sdval="0.545484319382437" style="border-bottom: 1px solid #000000; border-left: 1px solid #000000; border-right: 1px solid #000000; border-top: 1px solid #000000;">.5455</td>
<td align="RIGHT" sdnum="15369;0;#,###.0000" sdval="0.401007068543157" style="border-bottom: 1px solid #000000; border-left: 1px solid #000000; border-right: 1px solid #000000; border-top: 1px solid #000000;">.4010</td>
<td align="RIGHT" sdnum="15369;0;#,###.0000" sdval="0.293857643230705" style="border-bottom: 1px solid #000000; border-left: 1px solid #000000; border-right: 1px solid #000000; border-top: 1px solid #000000;">.2939</td>
<td align="RIGHT" sdnum="15369;0;#,###.0000" sdval="0.214638763942937" style="border-bottom: 1px solid #000000; border-left: 1px solid #000000; border-right: 1px solid #000000; border-top: 1px solid #000000;">.2146</td>
</tr>
</tbody></table>
<br />
So to answer your question, for a 30-year investment, a 2% fee will reduce the value of the fund to 55%, compared to 74% for a 1%-fee fund. It means <b>if you invest in the 2% fund, you'd be losing 26% more</b> (55/74 - 1) of the value of your fund.<br />
<div>
<br /></div>
<div>
I hope this answers your question.</div>
<div>
<br /></div>
Investor Juanhttp://www.blogger.com/profile/06304546864904571937noreply@blogger.comtag:blogger.com,1999:blog-5004589755220243665.post-63952920965239592232013-07-04T19:09:00.000+08:002013-07-04T19:10:10.578+08:00Short Answers to Unanswered Questions: Preferred Shares and Other Things<b>DEAR INVESTOR JUAN</b><br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgdaW3nl9LhBHwPthGVcPeT7UyaWy7CarXSiNfokdwTg1OgUlv2G0jZi0i2KkVWxxZfA_qRns_DG2NliyQsiuZlOhIb5OLI6iCTfvrg-n1EfqqT_Hcx2jgZYMwpFt7uLZyg2cHeC3YL6uU/s1000/credit+card.gif" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="175" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgdaW3nl9LhBHwPthGVcPeT7UyaWy7CarXSiNfokdwTg1OgUlv2G0jZi0i2KkVWxxZfA_qRns_DG2NliyQsiuZlOhIb5OLI6iCTfvrg-n1EfqqT_Hcx2jgZYMwpFt7uLZyg2cHeC3YL6uU/s400/credit+card.gif" width="400" /></a></div>
<br />
<i>Dear Investor Juan,</i><br />
<i><br /></i>
<i>Am a regular reader of your blog and while you have some articles there regarding preferred shares, I would like to ask the following regarding the dividend rates that goes with the issuance of these shares:</i><br />
<ul>
<li><i>How does one company determine the dividend rates for these preferred shares? </i></li>
<li><i>What do they use as basis for the dividend rates?</i></li>
<li><i>Do public companies have different basis for the dividend rates being offered ("as sweetener") vs.private, non-listed companies (if they wish to issue preferred shares to existing stockholders)?</i></li>
</ul>
<i>Would appreciate if you can share your insights on the above matter.</i><br />
<i><br /></i>
<i>Thank you and more power,</i><br />
<i><br /></i>
<i>Vic</i><br />
<br />
<br />
Dear Vic,<br />
<br />
Here are my answers to your questions.<br />
<br />
Firms issue preferred stock to raise money to finance projects or other uses. It's like a more expensive alternative to borrowing. The dividend rate on preferred stock is primarily determined by the market: the dividend yield on outstanding preferred shares issued by companies of the same risk serves as a benchmark. The dividend rate also reflects how much return investors are demanding for lending out their funds.<br />
<br />
I'm not so sure about my answer to your last question because I'm not very familiar with preferred stock issues by private companies (as I think they are quite rare), but these should have a higher dividend rate than preferred stock issued by a listed company in the same industry and of the same size because of the following reasons:<br />
<ul>
<li>An unlisted firm would be subject to less stringent reporting requirements, and would be less transparent, and thus riskier, in the eyes of investors.</li>
<li>Preferred shares of an unlisted firm would not be tradable in exchanges, and this lack of liquidity would prompt investors to demand a higher return.</li>
</ul>
<br />
***<br />
<br />
<i>Dear Investor Juan,</i><br />
<i><br /></i>
<i>I would like some advise on investing in BDO UITFs. I am currently a college student and really interested in investing at an early age. I am willing to invest about more than 10K in a BDO UITF product. Could you please explain to me the ff.:</i><br />
<i><br /></i>
<i>1) The fees/charges I have to pay in investing in BDO's UITF.</i><br />
<i>2) Do you recommend this EIP Program by BDO?</i><br />
<i>3) Is 10K enough to start investing?</i><br />
<i><br /></i>
<i>Thank you. </i><br />
<i><br /></i>
<i>Louie</i><br />
<br />
Dear Louie,<br />
<br />
I would only suggest investing in an equity fund if you don't have any debt, you already have an emergency fund, and you can afford to invest long-term. So if all these conditions are met, then here are my answers to your questions:<br />
<br />
1) You don't have to pay anything. All fees and taxes are automatically deducted and paid from the fund's assets and are already reflected by the fund's NAVPU.<br />
2) I'm okay with enrolling in an automatic investment scheme. Deciding which bank you would buy a UITF from is all up to you.<br />
3) Yes.<br />
<br />
Good luck!<br />
<br />
<br />
***<br />
<br />
<i>Dear Investor Juan,</i><br />
<i><br /></i>
<i>Got any good recommendations for a first credit card? I really need to get one soon.</i><br />
<i><br /></i>
<i>Marvin</i><br />
<br />
<br />
Dear Marvin,<br />
<br />
Local bank credit cards have lower interest than foreign bank credit cards, so I suggest that you just get one from a local bank that you already have an account with.<br />
<br />Investor Juanhttp://www.blogger.com/profile/06304546864904571937noreply@blogger.comtag:blogger.com,1999:blog-5004589755220243665.post-21678343635693087342013-06-30T15:06:00.000+08:002013-06-30T15:06:29.725+08:00Making Linux Work on Your PC, Part 1: Installing Linux Mint<div class="separator" style="clear: both; text-align: center;">
<a href="http://upload.wikimedia.org/wikipedia/commons/3/35/Tux.svg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="400" src="http://upload.wikimedia.org/wikipedia/commons/3/35/Tux.svg" width="346" /></a></div>
<br />
Around a year ago, I replaced my aging Asus EEE PC with a Lenovo X230 Thinkpad that I got on a significant student discount. The X230 came with Intel's i5 processor, 8GB of ram, and Windows 7 Home Edition. My early experience with the system had been fairly pleasant, but soon the OS started to not work properly too frequently (I had to do a fresh install five times in the last six months) that I decided that the only long-term solution to my problem would be to shift to Linux: it's free, more stable, and current versions supposedly offer a user experience that rivals Mac OS's.<br />
<br />
<b>Linux Mint</b><br />
<br />
Linux today is leap-years ahead of what we had a decade ago. Current incarnations of the OS from projects like <a href="http://www.ubuntu.com/" target="_blank">Ubuntu</a> are arguably just a couple of steps away from 100% mainstream usability, and initiatives like <a href="http://www.linuxmint.com/" target="_blank">Linux Mint</a> take things a step further by including important components such as audio and video codecs and useful software out of the box.<br />
<br />
To install Linux Mint on your PC, start by looking at the <a href="http://community.linuxmint.com/hardware/search" target="_blank">Linux Mint community's hardware database</a> to find out which version is most compatible with your system. For the X230, Linux Mint 14, code-named "Nadia," seems to be the best choice.<br />
<br />
Linux Mint comes with different desktop environments that have been developed by independent groups over the years. I've heard good things about the <a href="http://www.linuxmint.com/edition.php?id=118" target="_blank">"Cinammon"</a> desktop, so I decided to use it. Once you have decided which flavor of Linux you want to use, download the DVD iso of the installer and burn the file into a DVD installer disk.<br />
<br />
You have several alternatives in installing Linux Mint. One is to install it from within Windows as an application (mint4win). To do this, run the DVD while on Windows and install the OS as you would any other Windows software. While this option is more flexible since it's easy to uninstall if you change your mind, you only get to allocate a maximum of 30 GB of hard disk space to Linux.<br />
<br />
Another option is to boot from the DVD and install the OS either side-by-side with Windows or to completely assign your hard drive to Linux. Both of these options offer greater hard drive space options and reportedly faster boot and run times. To maintain access to Windows (in case I need it for whatever reason), I decided to install Linux Mint as a second OS.<br />
<br />
<b>Fixing the sound bug</b><br />
<br />
One frustrating bug in Nadia is the seeming lack of playback sound after installation. Fortunately, the fix (which comes from the <a href="http://forums.linuxmint.com/viewtopic.php?f=208&t=117247" target="_blank">Linux Mint forums</a>) turns out to be quite easy.<br />
<br />
<ol>
<li>First, open Menu > Software Manager. </li>
<li>Type "alsa" in the search box and make sure that the packages "alsa-base," "alsa-utils," and "alsamixergui:i386" are installed. In my case, I had to install "alsamixergui:i386"</li>
<li>Run "alsamixer" in the terminal. A user interface with colored columns should appear.</li>
<li>Press the right directional key until it takes you to the "Auto-Mute Mode" column, which you should find "Enabled" (this is the cause of the issue). Press up or down to change the value to "Disabled."</li>
<li>Issue fixed. Close the terminal window.</li>
</ol>
<div>
<b>Games, productivity, and other things</b></div>
<div>
<br /></div>
<div>
At this point, you should be able to use and enjoy your new Linux PC reasonably as it comes with everything you need for communication (the Firefox browser and the Thunderbird email client), productivity (Libre Office suite), and entertainment (VLC video player and the Banshee audio player, with all the codecs that you need). Still, the main reason why most people stick with Windows despite the advantages of Linux, particularly Linux Mint, in terms of price, stability, and more and more, usability, is the lack of games and other software. In Part 2, I'll show that this is not the case anymore, and that today there are very few reasons to stay with Windows.</div>
<div>
<br /></div>
Investor Juanhttp://www.blogger.com/profile/06304546864904571937noreply@blogger.comtag:blogger.com,1999:blog-5004589755220243665.post-84955334527813635472013-06-29T11:15:00.000+08:002013-06-29T11:26:45.866+08:00Google Tips and Tricks for StudentsI'm scrambling to beat my monthly quota, so I guess it's time for another lazy post.<br />
<br />
I got this from Reddit.<br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="http://i.imgur.com/ikDIW.gif" imageanchor="1" style="margin-left: 1em; margin-right: 1em;" target="_blank"><img border="0" height="5517" src="http://i.imgur.com/ikDIW.gif" width="500" /></a></div>
<div class="separator" style="clear: both; text-align: center;">
<br /></div>
Investor Juanhttp://www.blogger.com/profile/06304546864904571937noreply@blogger.comtag:blogger.com,1999:blog-5004589755220243665.post-64323009431805382622013-06-26T10:28:00.001+08:002013-06-26T10:28:35.291+08:00Saving and Investing for Your Child's College Education<b>DEAR INVESTOR JUAN</b><br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjfFjkWcyC97tcCO9cJG1F4K0N-rqVzGT8CRKB0aDGw5sUJg-OZNrItoA_3QRvCJIla4p41sPnfBpJ0xucwN1cqp__GTb7ueP9dkQwO6HnYm28UlUlKZnFJYJ8gWVI9Vs5BuBETwLXjM-k/s1600/jgsom.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="300" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjfFjkWcyC97tcCO9cJG1F4K0N-rqVzGT8CRKB0aDGw5sUJg-OZNrItoA_3QRvCJIla4p41sPnfBpJ0xucwN1cqp__GTb7ueP9dkQwO6HnYm28UlUlKZnFJYJ8gWVI9Vs5BuBETwLXjM-k/s400/jgsom.jpg" width="400" /></a></div>
<br />
<i>Dear Investor Juan,</i><br />
<i><br /></i>
<i>Please don't laugh at my silly question but is it possible to invest 10,000 pesos on something (don't know what kind of investment - UTIF maybe). Long term, maybe 15 years long. would my 10 000 earn enough that it can send my son to college?? It is his birthday next week and I just kept on thinking about his future.</i><br />
<i><br /></i>
<i>Thanks. </i><br />
<i><br /></i>
<i>Nice blog by the way. i just stumbled it today and i kept reading about stocks and investments!</i><br />
<i><br /></i>
<i>Joriel</i><br />
<br />
<br />
Dear Joriel,<br />
<br />
It's not a silly question, there's no need to apologize.<br />
<br />
Assuming that inflation would be 5% per year and diversified equity funds (such as equity UITFs) will grow at an average rate of 10% per year for 15 years, then the real rate of return of investing in equity funds is 5% per year (please see <a href="http://www.investorjuan.com/2013/06/the-30-60-90-approach-to-retirement.html" target="_blank">this post</a> for some background on real rates of return). 10,000 compounded by 5% per year for 15 years is<br />
<br />
<div style="text-align: center;">
10,000*(1.05)^15 = 20,789 pesos</div>
<br />
At today's prices, would this amount be enough for your son's college tuition? (It's more than enough for some colleges and universities, actually).<br />
<br />
If you want to send your son to a university which currently charges 150,000 pesos per year for tuition so that in 15 years you want to have 600,000 in today's peso, then you have to invest this much today:<br />
<br />
<div style="text-align: center;">
600,000/(1.05)^15 = 288,610 pesos</div>
<br />
If you want to invest in annual installments, you can use the PMT function in Excel using the arguments:<br />
<br />
<div style="text-align: center;">
rate = 5%</div>
<div style="text-align: center;">
nper = 15</div>
<div style="text-align: center;">
FV = 600,000</div>
<br />
And you'll get <b>27,805 pesos</b> (please ignore that the answer in Excel is negative), the amount that you have to invest <b>every year </b>(before adjusting for inflation) to have 600,000 in 15 years, assuming that the annual real rate of return is 5%. It's perfectly doable if you ask me. :)<br />
<br />
I hope I was able to help. Good luck!<br />
<br />Investor Juanhttp://www.blogger.com/profile/06304546864904571937noreply@blogger.comtag:blogger.com,1999:blog-5004589755220243665.post-8440469114028040272013-06-23T15:08:00.002+08:002013-06-23T15:08:35.213+08:00Almost-Forgotten Emails (Part 2)<b>DEAR INVESTOR JUAN</b><br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjnZa7qW5pw_Y-ZFTkSkXo_IQ4aHfStYXPnuI3YYDuN73CDM_cNUa27gWL5YD4UzzYFBGUlAKC5a-6Vvd1LKb3c67PI0Fsr6hYZyaptNum6PHW3g_tIDfLR4Q2Vh64FqQ1458xgOjhkJyM/s1600/pnb-allied-300x225.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjnZa7qW5pw_Y-ZFTkSkXo_IQ4aHfStYXPnuI3YYDuN73CDM_cNUa27gWL5YD4UzzYFBGUlAKC5a-6Vvd1LKb3c67PI0Fsr6hYZyaptNum6PHW3g_tIDfLR4Q2Vh64FqQ1458xgOjhkJyM/s1600/pnb-allied-300x225.jpg" /></a></div>
<br />
<i>As I was trying to reduce the number of unread emails in my inbox, I discovered a handful of emails from almost half a year ago. Here's my attempt to make up and apologize for the oversight.</i><br />
<br />
***<br />
<br />
<i>Dear Investor Juan,</i><br />
<i><br /></i>
<i>Helpful po talaga yung blog mo. Mejo nagiisip isip po ako ngayon. Kasi ang balak ko po is to invest or purchase ng units every month sa bpi equity ko, im planning 2k-4k per month. And Im planning to do it for a long time. Tapos I have a friend na gusto mg invest sa individual stocks, yung kuya nya kasi ganun yung gngwa. Citisec po yung broker nla and I saw there EIP na 5k ang starting investment then pwd rn mgaadd anytime na gusto mo. Im thinking of investing din sa individual stocks kng san alam ko n tatagal and lalaki p yung company. </i><br />
<i><br /></i>
<i>My question is, kung papasok ako sa individual stocks, baba po yung ilalagay ko sa equities ko, and sabay ko po silang lalagyan ng pera monthly ? Should I just focus on equities or I can also try individual stocks? And do you have feedback about Citiseconline? </i><br />
<i><br /></i>
<i>Thank you IJ. </i><br />
<i><br /></i>
<i>Rek<br /><b>February 6, 2013</b></i><br />
<br />
<br />
Dear Rek,<br />
<br />
Stick to the equity fund. Investing in individual stocks is too risky. There's not fool-proof way to pick stocks that will consistently outperform the market index or diversified equity funds. Also, by investing in individual stocks, you subject yourself needlessly to unique risk, which I have discussed in <a href="http://www.investorjuan.com/2013/03/unique-risk-systematic-risk-and.html" target="_blank">this post</a>.<br />
<br />
Finally, try to convince your friend to move to an equity fund, if it's not too late already.<br />
<br />
***<br />
<br />
<i>dear investor juan,</i><br />
<i><br /></i>
<i>good evening sir.</i><br />
<i>i've been reading your blogs a lot since i stumbled into it last week. i love your blog! it's been a great help.</i><br />
<i>from reading your blogs, i was already decided this morning on investing 1M on bdo equity funds.</i><br />
<i>but when i asked for an opinion from a metrobank investment officer about investing in equity funds now,she said it's better if i wait for the market correction. and it's too expensive now.</i><br />
<i>when i checked bloomberg.com just now,it increased by 1.27%.</i><br />
<i>what is your take on this sir?</i><br />
<i>i'd love to hear from you.</i><br />
<i>thank you.</i><br />
<div>
<i><br /></i></div>
<div>
<i>kristina</i></div>
<div>
<b><i>February 18, 2013</i></b></div>
<div>
<br /></div>
<div>
<div>
<br />
Dear Kristina,</div>
<div>
<br /></div>
<div>
Well, in hindsight, the investment officer that you talked to appears to be a genius since the correction that he mentioned seem to have happened just recently.</div>
<div>
<br /></div>
<div>
It's kinda funny that so-called experts have a knack of saying that a correction will happen, but fall short of saying exactly when it will happen and by how much prices will go down.</div>
<div>
<br /></div>
<div>
Anyway, with regard to investing in the long term, short term fluctuations--"corrections" included--does not really matter. And if you can't afford a long-term horizon, I suggest investing in something safer like bond or money market funds.</div>
</div>
<div>
<br /></div>
<div>
***</div>
<div>
<br /></div>
<div>
<div>
<i>Dear Investor Juan,</i></div>
<div>
<i><br /></i></div>
<div>
<i>I have bdo and metro uitf and would like to know if it is a good time to invest with pnb-allied uitf. Pnb-allied uitf performed well for 2012 and I was thinking of bdo-equitable/pci merger, now the bdo equity fund which I believe was originally equitable-pci product is performing way ahead of bpi or metro equity fund. So my question is in such mergers, does the uitf become better, what do you think of pnb-allied merger in particular will it be good time to invest in its uitf? Though I have exsisting accounts with both banks, the bank personnels/manager is not much help when I inquire saying the merger has just taken effect (feb 9) so no info is given to them.</i></div>
<div>
<i><br /></i></div>
<div>
<i>Thanks,</i></div>
<div>
<i>Maxine</i></div>
<div>
<i><b>February 19, 2013</b></i></div>
<div>
<br /></div>
<div>
<br /></div>
<div>
Dear Maxine,</div>
<div>
<br /></div>
<div>
I don't have data to support this claim, but I strongly believe that events such as bank mergers have nothing to do with the performance of UITFs. </div>
<div>
<br /></div>
<div>
The performance of a fund depends on the performance of its constituent assets, and the composition of the fund (of a particular type) is determined by the fund manager. However, <a href="http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1356021" target="_blank">US data shows</a> that skill may not be enough to consistently beat the market index. Finally, high fees make it even more difficult for investors to earn market-beating returns. IMO, neither of these factors--the skill of the fund manager and the level of fees--has anything to do with bank mergers.</div>
</div>
<div>
<br /></div>
Investor Juanhttp://www.blogger.com/profile/06304546864904571937noreply@blogger.comtag:blogger.com,1999:blog-5004589755220243665.post-3087949902505715502013-06-18T16:27:00.001+08:002013-06-18T16:27:36.641+08:00Almost-Forgotten Emails (Part 1)<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh1nVK2DDhnOX0MhmkC_5xc-patulxosKOEsHhxEjDMPsGEAaEt2VaQflI3X0P3CiRWIiduxxnwDveOFTPhWRTS6bA0g4PaPi3hz9D8JBVKVIwEGefN0YG_skI1exynCPtJ8Y_XQC_VRfk/s1600/email_marketing2.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh1nVK2DDhnOX0MhmkC_5xc-patulxosKOEsHhxEjDMPsGEAaEt2VaQflI3X0P3CiRWIiduxxnwDveOFTPhWRTS6bA0g4PaPi3hz9D8JBVKVIwEGefN0YG_skI1exynCPtJ8Y_XQC_VRfk/s320/email_marketing2.jpg" width="320" /></a><b>DEAR INVESTOR JUAN</b><br />
<br />
<i>As I was trying to reduce the number of unread emails in my inbox, I discovered a handful of emails from almost half a year ago. Here's my attempt to make up and apologize for the oversight.</i><br />
<br />
***<br />
<br />
<i>Dear Investor Juan,</i><br />
<i><br /></i>
<i>I have been visiting your blog for the past few months or so.</i><br />
<i><br /></i>
<i>I had just cleared all my debts I have incurred while I was in college and my not so fortunate first job.</i><br />
<i><br /></i>
<i>I was just starting to build up some savings when I stumbled upon your blog.</i><br />
<i><br /></i>
<i>It was very reassuring knowing I was on the right track while reading your "A Guide for Newbie Investors" posts!</i><br />
<i><br /></i>
<i>Thank you very much for sharing the things that you know.</i><br />
<i><br /></i>
<i>I'm slowly trying to read backwards from your oldest post to the most recent ones, I'm even reading the comments!</i><br />
<i><br /></i>
<i>Currently I am debt free and about 80% on my emergency fund.</i><br />
<i><br /></i>
<i>As I have yet to actually venture into investing I am still a green horn so to speak and can only hope that you would indulged me and my questions.</i><br />
<ul>
<li><i>Do you still think UITF's are good vehicles for long term investments? (Already asked on older posts, just checking to see if it still is the case now)</i></li>
<li><i>On the "A Guide for Newbie Investors", its says the next step for me would be to invest in assets with relatively lower risk, I did some checking comparing different funds, and it seems BDO outperforms its competitors every time (at least on the dates I've checked, as far as 2008 and even recent histories). Logically I would choose to invest on BDO, but seeing that their unit price for their balanced fund is currently valued at 3400~. It seems a bit steep and has a high chance that I would lose money even if I intend to invest on a long term basis. Am I wrong?</i></li>
<li><i>Secondly, why is it that BDO balanced fund is valued so high compared to the other balanced funds and yet they still managed to out perform their competitors? </i></li>
<li><i>This is a silly, please humor me. Should the bank go under, would I still be able to claim my investments?</i></li>
<li><i>Let's say I invested some money at 1000 pesos per unit and opt for the 5 year term, when maturity date came I discovered that the value per unit is 800 pesos. Naturally I wouldn't want to withdraw my investment just yet. Would they(banks) be able to force me into withdrawing my investment? What would happen in this scenario?</i></li>
</ul>
<i><br /></i>
<i>Regards,</i><br />
<i><br /></i>
<i>Green Horn</i><br />
<i><b>December 28, 2012</b></i><br />
<br />
<br />
Dear Green Horn,<br />
<br />
In general, UITFs are still the best investment vehicle for the "ordinary" investor since they offer a convenient and relatively inexpensive way to diversify. At least until something better becomes available (like lower-cost index ETFs... hopefully).<br />
<ul>
<li>Evaluate UITFs based on fees, performance (% change in NAVPU over time), reputation, etc., but not on the actual NAVPU on any given day. It's misleading to compare NAVPUs of different UITFs because even if they are of the same type, their exact composition may be significantly different. If you're concerned whether a UITF is overpriced or not, then you should evaluate whether the stocks and/or bonds that comprise the UITF are overpriced.</li>
<li>There is evidence that superior fund performance is as likely the result of expert fund management as plain dumb luck.</li>
<li>If the bank whose UITF you have invested in goes bankrupt, you're still entitled to your units. You are the legal owner of your investment, and the bank is just the trustee of your funds and the UITF is not part of its assets.</li>
<li>I'm not sure if I completely understand your last question, but if you're talking about a UITF investment, then no, I don't see how the bank can force you to divest from the fund.</li>
</ul>
<br />
<br />
***<br />
<br />
<i>Dear Investor Juan,</i><br />
<i><br /></i>
<i>First and foremost, thank you for making planning for investments and future financial security easy to understand. I would just like to ask for your opinion regarding the best possible course of action for me to take right now. I am a 22 year old student and I have recently invested a bulk amount of Php 200,000 in an Equity UITF (November). I have also invested in an Easy Investment Program for the same Equity UITF.</i><br />
<i><br /></i>
<i>Given the continuous growth of the stock market and the upcoming release of the first ETF's in the Philippines, I would just like to know if I should cash out my UITF's and/or</i><br />
<i><br /></i>
<i>1) Invest in different company stocks listed in the PSE</i><br />
<i>2) Redirect my funds to the ETF's expected to be launched during the first half of this year</i><br />
<i>3) Keep my UITF investment as is</i><br />
<i><br /></i>
<i>Which do you think has the largest potential for long-term growth, especially for a student like me?</i><br />
<i><br /></i>
<i>Thank you very much!</i><br />
<i><br /></i>
<i>More power to Investor Juan!</i><br />
<i><br /></i>
<i>Stephanie</i><br />
<i><b>January 12, 2013</b></i><br />
<br />
<br />
Dear Stephanie,<br />
<br />
There's no infallible proof that fund managers can consistently outperform the index over a long period of time, and we are 100% sure that a 0.5% trust fee is better than 1%. So if a lower-cost (i.e., has lower fees) fund such as an index ETF becomes available, I suggest transferring your investment to that.<br />
<br />
Until then, don't redeem your units until you need the money, or have some better use for it.<br />
<br />
<br />
***<br />
<br />
<i>Dear Investor Juan,</i><br />
<i><br /></i>
<i>I just started last 2011, I all ready have at least Php 200,000.00 in the bank and currently Php 100,000.00 is in a time deposit. I also have a sun life mutual fund I current still paying. My dad want me to put the other Php 100,000.00 in a time deposit but in the current percentage the bank is offering its not worth it (it too low). The bank offered me to invest it in Peso Money market fund , peso bond fund , GS fund , Peso fixed income fund , Peso balanced Fund , Equity Fund. 1st off , I don't really know all of that. I would like to invest if possible but since i can't understand it. I kind off hesitant to invest.</i><br />
<i><br /></i>
<i>Can you give me an idea on how should i invest? I know that the Philippines economy is getting better and will get better in the near future. I think it is good to invest in stocks. What direction should i go?</i><br />
<i><br /></i>
<i>Also will the peso dollar exchange rate decrease? I would like to buy dollar if possible and also invest it.</i><br />
<i><br /></i>
<i>If you have article i can read for reference it would help me a lot. I would like to risk my money but since i don't have an idea I can't. Also that some of the mention fund and bond that the bank is offering the minimum is 100,000.00 and 10,000.00.</i><br />
<i><br /></i>
<i>Regards</i><br />
<i><br /></i>
<i>Carina<br /><b>January 21, 2013</b></i><br />
<br />
<br />
Dear Carina,<br />
<br />
It's impossible to accurately predict how the economy will perform in the near future. So-called experts can't do it, and mere mortals like us can't as well. Same goes for exchange rates.<br />
<br />
The very LONG term is a different story, however. In 30 years or more, it would be safe to bet that advances in technology and increases in productivity will result in significant economic gains and greater wealth. In 30 years, life should be significantly better than it is today. Well, if it doesn't turn out that way, then we'll have more serious concerns than investment returns.<br />
<br />
Given this premise, your investment decision should be determined by your risk preference and your investment horizon.<br />
<br />
If you want zero chance that you'll lose principal, then invest in time deposits, t-bills, or money market funds. Also, these investments would be best if you'll need the money soon, like in five years or less.<br />
<br />
If you can afford a bit of risk or are investing for the short or medium term, then invest in a fixed income fund or individual bonds.<br />
<br />
Finally, if you have a long investment horizon, like at least 10 years, although longer would be better, then invest in an equity fund.<br />
<br />Investor Juanhttp://www.blogger.com/profile/06304546864904571937noreply@blogger.comtag:blogger.com,1999:blog-5004589755220243665.post-25333614149784199512013-06-16T09:00:00.000+08:002013-06-16T09:00:03.927+08:00The Men Who Made Us FatHealth is wealth. No truthier words have been spoken.<br />
<br />
<div style="text-align: center;">
<iframe allowfullscreen="" frameborder="0" height="281" src="http://www.youtube.com/embed/E6nGlLUBkOQ" width="500"></iframe><br /></div>
<br />
<div style="text-align: center;">
<iframe allowfullscreen="" frameborder="0" height="281" src="http://www.youtube.com/embed/owekbSp7wU0" width="500"></iframe><br /></div>
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<div style="text-align: center;">
<iframe allowfullscreen="" frameborder="0" height="281" src="http://www.youtube.com/embed/ZlQHXkOUjeI" width="500"></iframe><br /></div>
<br />Investor Juanhttp://www.blogger.com/profile/06304546864904571937noreply@blogger.comtag:blogger.com,1999:blog-5004589755220243665.post-33391552741545873852013-06-13T16:51:00.000+08:002013-06-26T10:13:18.722+08:00The 30-60-90 Approach to Retirement Planning, Part 3: Adjusting the Savings Formula for Different Saving Periods<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiMqyXsJJbxuo6Tx-K_2lK2uo-QsLXxbQGonrGsuNriKeXc4-vNK061dOipQKXaxlJ5Ey1cl7Tui-GeT8SpwygISkOWuF3vnNuwYdZ0rJVsRY4xsh1Ph9ob88RdBKpcKe5khueTl-cRdAs/s1600/35+cal+word+problems.bmp" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="127" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiMqyXsJJbxuo6Tx-K_2lK2uo-QsLXxbQGonrGsuNriKeXc4-vNK061dOipQKXaxlJ5Ey1cl7Tui-GeT8SpwygISkOWuF3vnNuwYdZ0rJVsRY4xsh1Ph9ob88RdBKpcKe5khueTl-cRdAs/s400/35+cal+word+problems.bmp" width="400" /></a></div>
<br />
In <a href="http://www.investorjuan.com/2013/06/the-30-60-90-approach-to-retirement.html" target="_blank">Part 2</a>, we have seen that using the 30-60-90 approach, and assuming an annual real investment return of 4.7%, you should save an amount equal to<br />
<br />
<div style="text-align: center;">
Savings = Expenses/4</div>
<br />
Where "Expenses" is your estimated monthly or yearly retirement expenses at today's prices. <br />
<br />
But what if you don't closely fit the 30-60-90 scenario? What if, for whatever reason, you decide to start saving for retirement much later, like say, age 40? How can we adjust the savings formula above to better reflect your decisions?<br />
<br />
Starting to save for retirement later than age 30 will obviously result a higher savings amount since you'll have less earning years to prepare for the same amount of retirement expenses. If you start at age 40, for example, then your savings for the entire year should be enough not just for year 60--your first year of retirement--but also a portion of your expenses in the following year. Furthermore, whereas in the 30-60-90 scenario all your retirement fund deposits have a 30-year horizon, starting later shortens your investment horizon correspondingly and exposes your retirement portfolio to greater risk.<br />
<br />
To adjust the savings formula in order to reflect a variable saving period <i>y</i>, take the following. Assuming constant prices, you expect to spend an amount <i>E</i> every year starting on your 60th birthday--the beginning of retirement--for 30 years until you turn 89. You plan to finance your retirement by contributing an amount <i>S</i> every year to your retirement fund, starting on your (60 - <i>y</i>)th birthday, for <i>y</i> years until age 59. If your retirement fund earns a real rate of return <i>r</i>, <i><b>then the future value of all S payments should equal the present value of all E expenses on your 59th birthday.</b> </i>In equation form, using the formula for <a href="http://en.wikipedia.org/wiki/Annuity_(finance_theory)" target="_blank">future value and present value of an annuity</a>, we get<br />
<br />
<div style="text-align: center;">
<i>S</i>*[(1 + <i>r</i>)^<i>y</i> - 1]/<i>r</i> = E*[1 - 1/(1 + <i>r</i>)^30]/<i>r</i></div>
<div>
<br /></div>
<div>
Simplifying,<br />
<br />
<div style="text-align: center;">
<b><i>S</i> = <i>E</i>*[1 - 1/(1 + <i>r</i>)^30]/[(1 + <i>r</i>)^<i>y</i> - 1]</b></div>
<br />
(I apologize, this equation can't be simplified any further.)<br />
<br />
As an example, if <i>E</i> = 32,000, <i>r</i> = 4.7%, and <i>y</i> = 20, then<br />
<br />
<div style="text-align: center;">
<i>S</i> = 32,000*[1 - 1/1.047^30]/[1.047^20 - 1]</div>
<br />
<div style="text-align: center;">
<i>S</i> = 32,000*0.4967 = 15,894</div>
<br />
Or almost double the savings amount if you start at 30 years old, or just half of the expense estimate. If you use <i>y</i> = 30 as in the 30-60-90 scenario, you'll actually get the original equation <i>S</i> = <i>E</i>/4.<br />
<br />
Finally, you can also use the above formula for different saving and retirement periods. If <i>z</i> = the number of years of retirement, just replace "30" by <i>z </i>so that<br />
<br />
<div style="text-align: center;">
<b><i>S</i> = <i>E</i>*[1 - 1/(1 + <i>r</i>)^<i>z</i>]/[(1 + <i>r</i>)^<i>y</i> - 1]</b></div>
<br />
So if you're now 30 years old and you plan to retire by 50 and you retain the planning horizon of up to 90 years old, then <i>y</i> = 20 and <i>z</i> = 40. Using the same <i>E</i> and <i>r</i>,<br />
<br />
<div style="text-align: center;">
<i>S</i> = 32,000*[1 - 1/1.047^40]/[1.047^20 - 1]</div>
<br />
<div style="text-align: center;">
<i>S</i> = 32,000*0.5584 = 17,868</div>
<br />
Remember that these estimates are only for the amount that you need to save in your first year (age 60 - <i>y</i>). For subsequent years, you need to adjust for inflation, like in the Part 2, but this time with a slightly different factor<br />
<br />
<div style="text-align: center;">
<b>Savings in Year <i>t</i> = (Savings in Year <i>t</i>)*(1 + <i>g</i>)^(<i>z</i>/<i>y</i>)</b></div>
</div>
<div>
<br /></div>
<div>
So that if you start saving at age 40 (<i>y</i> = 20), retire at 60 (<i>z</i> = 30), and the annual inflation rate is <i>g</i> = 4.5%, then<br />
<br />
<div>
Savings at age 40: <b>15,894 per month</b></div>
<div>
Savings at age 41: 15,894*(1.045^1.5) = <b>16,979 per month</b></div>
<div>
<br /></div>
<div>
...</div>
<div>
<br /></div>
Savings at age 55: 15,894*1.045^(1.5*15) = <b>42,791 per month</b><br />
<br />
As always, figuring out the savings amount is just the first step. To meet your target real rate of return, you should invest your retirement savings in a low-cost equity fund and only redeem your units/shares at retirement and as needed.<br />
<br /></div>
Investor Juanhttp://www.blogger.com/profile/06304546864904571937noreply@blogger.comtag:blogger.com,1999:blog-5004589755220243665.post-21834912807364000682013-06-09T19:21:00.003+08:002013-06-09T19:22:59.538+08:00Short Answers to Unanswered Questions: "Stocks" vs. "Equity" Funds and Comparing Investment Strategies<b>DEAR INVESTOR JUAN</b><br />
<br />
<div class="separator" style="clear: both; text-align: center;">
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhz4_34siim7TS5RIw-hatJgvvbyJF8l5J3qZXsuo45Cz9mbB8ajRnW_Q6u-7te9PZ7BFH-XdmqzIgk0t1osW4oddEwTQicBEXOGzf8FJRvQ3iG1bT3EmfSgTlpE7cDKPE9Chf-_9mZk1o/s1600/dilbert+stock+picking.gif" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="125" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhz4_34siim7TS5RIw-hatJgvvbyJF8l5J3qZXsuo45Cz9mbB8ajRnW_Q6u-7te9PZ7BFH-XdmqzIgk0t1osW4oddEwTQicBEXOGzf8FJRvQ3iG1bT3EmfSgTlpE7cDKPE9Chf-_9mZk1o/s400/dilbert+stock+picking.gif" width="400" /></a></div>
<br />
<i>Dear Investor Juan,</i><br />
<i><br /></i>
<i>I was also second guessing myself about retirement savings. Most of my retirement funds are in stocks. I was already thinking about transferring it to BDO Equity UITF and wasn't really sure if that's the way to go. Is it?</i><br />
<i><br /></i>
<i>How exactly do I do this? Since the value of stocks that I have is about 850. Do I take out 50 per month and transfer that to the UITF? and how about the monthly savings that I have? (around 35/month) </i><br />
<i><br /></i>
<i>Sorry po kung maraming tanong. >_< I am just confuzzled now. I really thought that going into the stock market was the best way to earn make my money grow.</i><br />
<i><br /></i>
<i>Ning</i><br />
<br />
<br />
Dear Ning.<br />
<br />
When you say that your retirement funds are mostly in stocks, how many stocks exactly? If your funds are spread across ten or more stocks, then your portfolio may already be sufficiently diversified (within the equity asset class) and you can choose to keep your funds in those stocks. To improve your portfolio's level of diversification, just invest future savings in an equity UITF.<br />
<br />
If your funds are invested only in a handful of stocks, then you have significant exposure to unsystematic risk. To lower your risk exposure, sell some of your holdings and either invest in many other different stocks or in an equity UITF. How you do it--"one time, big time" or in installments--is arbitrary since there's no indisputable proof that "dollar cost averaging" is a superior strategy, contrary to popular opinion.<br />
<br />
Finally, there's no reason to be "confuzzled." You're right, "going into the stock market" is arguably the best way to make your money grow. "Stocks" are the same as "equities"--investing in an equity fund is basically the same as holding a basket of individual stocks. The only difference is that if you invest in a few stocks you needlessly expose yourself to risk that can easily be eliminated with diversification. Again, I emphasize that for retirement savings, investing in a low-cost equity fund in the long term (20 to 30 years) is the way to go.<br />
<br />
<br />
***<br />
<br />
<i>Dear Investor Juan,</i><br />
<i><br /></i>
<i>Thank you very much for a very informative blog. </i><br />
<i><br /></i>
<i>I started investing only last year with a reputable global insurance company, so what i have is an insurance link investment. lately, i have been hearing a lot about mf and uitf, and my curiosity is awakened. thanks for blogs like yours and tv shows which explain everything, i now understand the pros and cons of these better.</i><br />
<i><br /></i>
<i>I have been trying to do a mock computation of yields through bdo online, and i noticed that if i put my money, say 500k, from Jan. 2 - May 31, 2013 (method a), my gain would be more or less 68k. but, if i invest from Jan. for 30 days (method b), take it out, then reinvest it again for another 30 days, and so on until May 31, my gain would be about 82k. </i><br />
<i><br /></i>
<i>what is your take on that?</i><br />
<i><br /></i>
<i>thank you so much. may God bless you in your advocacy. more power!</i><br />
<i><br /></i>
<i>Anonymous</i><br />
<br />
<br />
Dear Anonymous,<br />
<br />
I'm not sure where the problem is, but you should earn the same returns with the two strategies since in Method B, whenever you reenter the fund you would be buying at the same NAVPU as when you last exited. Actually, if you're talking about an equity fund, then you should earn less with Method B because of early redemption charges.<br />
<br />Investor Juanhttp://www.blogger.com/profile/06304546864904571937noreply@blogger.comtag:blogger.com,1999:blog-5004589755220243665.post-9024496879336293072013-06-05T22:01:00.001+08:002013-07-02T15:33:44.149+08:00The 30-60-90 Approach to Retirement Planning, Part 2: Considering Inflation and Investment Returns<div class="separator" style="clear: both; text-align: center;">
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<br />
According to <a href="http://www.investorjuan.com/2013/05/the-30-60-90-approach-to-retirement.html" target="_blank">the "30-60-90" approach to retirement planning</a>, since the time it takes to accumulate funds for retirement and the retirement period are both 30 years, the amount that you save in any given month or year will finance your retirement expenses in 30 years. In this post, we'll discuss a simple way to estimate how much you need to save today to be able to finance what you intend to spend in 30 years considering the effects of inflation and investment returns.<br />
<br />
Let's say that you estimate that on any given month, you'll need 32,000 pesos at today's prices to support your chosen lifestyle. If we consider inflation, then you have to save more than 32,000 this month <i>so that in 30 years, you'll be able to buy what 32,000 can buy today</i> (maybe you should read this phrase one more time, it can be confusing)--but how much more? The inflation rate is the percent increase in the prices of basic goods and services every year. Specifically, if the price a good or service at time <i>t</i> is Price(<i>t</i>) and the average annual inflation rate is <i>g</i>, then the price of the good after <i>n</i> years is<br />
<br />
<div style="text-align: center;">
Price(<i>t + n</i>) = Price(<i>t</i>)*(1 + <i>g</i>)^<i>n</i></div>
<br />
<i>(I hope you're not turned off by the math. Honestly, using a bit of math is unavoidable in practical financial management. I always try to make technical discussions as simple as possible, so I hope you'll bear with me.)</i><br />
<br />
For example, let's say that today, or <i>t</i> = 0, 32,000 pesos, or Price(0), can buy a certain amount of goods and services. In 30 years, or <i>n</i> = 30, how much money do you need to be able to buy the same amount of goods and services if the <a href="http://www.investorjuan.com/2013/05/concerns-about-early-retirement.html" target="_blank">average annual inflation rate</a>, <i>g</i>, is 4.5%? Using the above equation,<br />
<br />
<div style="text-align: center;">
Price(30) = 32,000*(1.045)^30 = 119,850</div>
<br />
Which means that 32,000 today will be able to buy as much stuff as 119,850 in 30 years. Does this mean you have to save 119,850 today in order to to finance your target lifestyle? Well, yes, if you plan on keeping your savings in a piggy bank or under the mattress--if your retirement savings will earn zero or very little interest. But if you keep your retirement savings in an interest-earning vehicle, you won't have to save as much. In fact, if you invest in vehicles that provide returns that beat inflation, then you can even save an amount that is less than your target expense. But how much less?<br />
<br />
To take investment returns and the time value of money into account, we need to use the <a href="http://www.investorjuan.com/2010/11/capital-budgeting-part-2-net-present.html" target="_blank">present value</a> concept. If you need an amount <span style="text-align: center;">Price(</span><i style="text-align: center;">t + n</i><span style="text-align: center;">) in <i>n </i>years and invest your savings at time <i>t</i> in an instrument that earns a rate of return <i>i</i> per year, then the amount that you have to save and invest at time <i>t</i> is</span><br />
<div style="text-align: center;">
<br /></div>
<div style="text-align: center;">
Savings(<i>t</i>) = [Price(<i>t + n</i>)]/[(1 + <i>i</i>)^<i>n</i>]</div>
<div style="text-align: center;">
<br /></div>
<div style="text-align: left;">
Using the same example above, in order to accumulate 119,850 in 30 years by investing in an instrument that earns an average annual return of 7%, then you have to save<br />
<br />
<div style="text-align: center;">
Savings(0) = 119,850/[(1.07)^30] = 15,744<br />
<br />
<div style="text-align: left;">
Less than half of our original retirement expense estimate of 32,000.</div>
</div>
</div>
<br />
Taking inflation and investment returns simultaneously by combining the two equations above, we get<br />
<br />
<div style="text-align: center;">
Savings(<i>t</i>) = [Expenses(<i>t</i>)*(1 + <i>g</i>)^<i>n</i>]/[(1 + <i>i</i>)^<i>n</i>] = [Expense(<i>t</i>)]*[(1 + <i>g</i>)^<i>n</i>]/[(1 + <i>i</i>)^<i>n</i>] </div>
<br />
Where "Expenses(<i>t</i>)" is the estimated monthly or annual expense at time <i>t. </i>With the 30-60-90 approach, <i>t</i> = 0 and <i>n</i> = 30, so<br />
<br />
<div style="text-align: center;">
<b>Savings = Expenses*<span style="text-align: center;">[(1 + </span><i style="text-align: center;">g</i><span style="text-align: center;">)</span><span style="text-align: center;">/(1 + </span><i style="text-align: center;">i</i><span style="text-align: center;">)]^30</span></b></div>
<div style="text-align: left;">
<br /></div>
<div style="text-align: left;">
This equation shows that if your annual investment return is the same as the inflation rate, or <i>i</i> = <i>g</i>, then <span style="text-align: center;">Savings = Expenses, or you have to save an amount equal to your projected future expense at today's prices (32,000 in the example above). If you invest such that <i>i</i> > <i>g</i>, like in the above example, then your savings requirement will be less than your estimated expenses (e.g., 15,744 vs. 32,000). Finally and most importantly, <i>if your annual investment return is less than the inflation rate, such as if you invest in savings deposits, time deposits, or not at all, then you would need to save more than your estimated periodic expenses.</i></span></div>
<div style="text-align: left;">
<br /></div>
<div style="text-align: left;">
<span style="text-align: center;">(1 + <i>i</i>)/(1 + <i>g</i>) is a special quantity in finance and economics that is referred to as the <i>real</i> rate of return on investments, for which we'll henceforth use the symbol <i>r</i>. It is the rate of return of an investment at constant prices, or at <i>g </i>= 0. Approximately, <i>r = i</i> - <i>g</i>, so that</span>
<br />
<br />
<div style="text-align: center;">
<b>Savings = Expenses/(1 + r)^30 </b></div>
<br />
<span style="text-align: center;">To check, at </span><i style="text-align: center;">i</i><span style="text-align: center;"> = 7% and </span><i style="text-align: center;">g</i><span style="text-align: center;"> = 4.5%,</span><i style="text-align: center;"> r</i><span style="text-align: center;"> = 2.5%. If your target monthly expense is 32,000, then </span>Savings = 32,000/(1.025)^30 = 15,256. Not exactly the same as the earlier result of 15,744, but close enough for all intents and purposes.<br />
<br />
This last equation shows that as long as you invest your retirement savings in an instrument with a consistently positive real rate of return, then you can save an amount that is less than your estimated retirement expenses. But which instrument can reliably provide a positive real rate of return? Low-cost equity funds, particularly in long-term horizons such as 30 years. I'll discuss this in more detail in a future post, but if you want to look into it now, I suggest reading <a href="http://www.amazon.com/Stocks-Long-Run-Definitive-Investment/dp/0071494707" target="_blank">Jeremy Siegel's Stocks for the Long Run</a>.</div>
<br />
In the Philippines, the average annual inflation rate in the past decade is 4.5% and the average one-year change in the PSEi from 1994 to 2013 is around 8.5%. Assuming a PSEi dividend yield of 2%, the average annual return of the market is 10.5%, resulting in an average real rate of return <i>r</i> of 6% per year. For a conservatism, however, we can use a lower estimate for <i>r</i>, such as 5%.<br />
<br />
<div style="text-align: center;">
Savings = Expenses/(1.05)^30 <br />
<br />
Savings = Expenses/4.3</div>
<br />
For further simplification, you may want to round the divisor to 4, which is equivalent to <i>r = </i>4.7%.<br />
<br />
<div style="text-align: center;">
<b>Savings = Expenses/4</b></div>
<br />
To summarize, using the 30-60-90 approach and assuming that the average real rate of return of an equity fund is 4.7%, you need to save an amount equal to your estimated expenses divided by 4. It does not end here, though, because in order to realize your estimated real returns, <b>you have to religiously invest your retirement savings in a low cost equity fund and withdraw no earlier than 30 years after.</b><br />
<br />
Finally, I must clarify that the savings amount given by "Savings = Expenses/4" is only for the first month or period of the earning period, or at age 30 in the 30-60-90 framework. In the succeeding years, the savings amount must be adjusted by the annual inflation rate. <br />
<br />
For example, if Expenses = 32,000 per month, then<br />
<br />
Savings at age 30: 32,000/4 = <b>8,000 per month</b><br />
Savings at age 31: 8,000*1.045 = <b>8,360 per month</b><br />
<br />
...<br />
<br />
Savings at age 55: 8,000*1.045^25 = <b>24,043 per month</b><br />
<br />
But what if your situation does not adequately fit the 30-60-90 scenario, like if you're just starting to save for retirement at age 40? In a follow-up post, I'll show how you can adjust the savings formula to better reflect your situation.<br />
<br />
***<br />
<br />
EDIT: 2 July, 2013<br /><br />I checked my numbers again, and the average one-year change in the PSEi from 1994 to 2013 that I got was 8.6%, not 12%. I will make the necessary changes in the above discussion to reflect this difference.<br />
<br />Investor Juanhttp://www.blogger.com/profile/06304546864904571937noreply@blogger.comtag:blogger.com,1999:blog-5004589755220243665.post-44086681638504097402013-05-30T20:52:00.000+08:002013-05-30T20:55:45.305+08:00Add-on Rates Revisited<b>DEAR INVESTOR JUAN</b><br />
<br />
<i>Dear Investor Juan,</i><br />
<i><br /></i>
<i>I just got a loan for 450k 36months to pay.. I see a per annum rate of 28.58% but she was saying something about 1.29% per month add on rate.. Im confused, mind explaining it to me the add on rate?</i><br />
<i><br /></i>
<i>Thanks,</i><br />
<i>Mon</i><br />
<br />
<br />
Dear Mon,<br />
<br />
I have already discussed the difference between add-on rate and the monthly compounded interest rate (such as in credit card debt or home and car loans) in <a href="http://www.investorjuan.com/2011/05/add-on-interest-dont-let-numbers.html" target="_blank">this post</a>, but I will try to explain in again and apply it to your situation.<br />
<br />
With add-on interest, the quoted monthly add-on interest rate is multiplied to the principal or loan amount to get the <i><b>monthly interest payment</b></i>. For the <b><i>monthly principal repayment</i></b>, the loan amount is divided by the loan duration. In your case, therefore, the monthly interest payment is 1.29%*450,000 = <b>5,805</b>, while the monthly principal repayment is 450,000/36 = <b>12,500</b>, and the total monthly payment is 5,805 + 12,500 = <b>18,305</b>, an amount that you would have to pay every month, as seen in the spreadsheet below. If you scroll down to the bottom of the sheet, you'll see that at the end of 36 months, you will have paid a total of <b>658,980</b>, of which <b>208,980</b> is for interest. Further down, you'll see that the internal rate of return or IRR, a way to compute for return or interest while considering the <i><a href="http://www.investorjuan.com/2010/03/time-value-of-money-peso-today-is-worth.html" target="_blank">timing</a></i> of payments, is <b>26.72%</b>. This is not exactly what your bank representative quoted, but this may be what she was talking about.<br />
<br />
<iframe frameborder="0" height="300" src="https://docs.google.com/spreadsheet/pub?key=0ArERs1PcPmBydERCT1dYb1NnT2pZc1hRSEpBQjhpaUE&single=true&gid=0&output=html&widget=true" width="500"></iframe>
<br />
<br />
Now if we were to take the same monthly interest rate of 1.29% but this time apply it as a monthly compounded rate in an amortized loan, then we'll see a different payment schedule. Please refer to the spreadsheet below.<br />
<br />
<iframe frameborder="0" height="300" src="https://docs.google.com/spreadsheet/pub?key=0ArERs1PcPmBydERCT1dYb1NnT2pZc1hRSEpBQjhpaUE&single=true&gid=1&output=html&widget=true" width="500"></iframe><br />
<br />
To get the monthly payment (or "amortization") of this kind of loan, we have to use the PMT function of Excel or any spreadsheet program, where "rate" = 1.29%, "nper" = 36, and PV = -450,000. The resulting figure is 15,705, which is the amount that is paid every month until the 36th month. In the first payment, 1.29%*450,000 = <b>5,805</b> goes to interest, same as in the add-on loan, so 15,705 - 5,805 = 9,900 goes to principal. The following month, the principal goes down to 450,000 - 9,900 = 440,100, which will then become the basis for this month's interest payment of 440,100*1.29% = <b>5,677</b>. Do you now see how this kind of loan is different from your add-on loan?<br />
<br />
With monthly compounded interest loans, principal repayments are deducted from the principal, the lower principal balance becomes the basis for interest computation, and interest payments decline (and in the case of amortized loans where the monthly payment is constant, principal payments increase) as the end of the loan period nears. <i>With add-on interest, monthly interest payments stay the same even as part of the principal is repaid every month</i>. And this is why, at the same "monthly interest rate," add-on interest loans are more expensive than monthly compounded debt.<br />
<br />
I hope I was able to explain the add-on rate sufficiently, Mon. Good luck.<br />
<br />Investor Juanhttp://www.blogger.com/profile/06304546864904571937noreply@blogger.comtag:blogger.com,1999:blog-5004589755220243665.post-54278751038914688132013-05-27T19:12:00.002+08:002013-05-27T19:12:57.929+08:00Concerns about Early Retirement<b>DEAR INVESTOR JUAN</b><br />
<br />
<i>Dear Investor Juan,</i><br />
<i><br /></i>
<i>I've been reading your blog and I find it entertaining and at the same time educational. I have a few questions for you but let me give you a little background about myself. I am 27 years old and single. Been working as a caregiver and my goal is to quit work by next year and follow my long time dream of becoming a lay missionary. I wasn't able to follow my dream coz my family needed me financially and now that I settled them already, it's time for me to follow my heart's desire.</i><br />
<i><br /></i>
<i>Let me give you and idea on my financial life and please tell me if you think I can follow my goal or if I should extend a year or two before quitting work for good.</i><br />
<i><br /></i>
<i>Net worth: Php 4 Million</i><br />
<i>Mutual fund : Php 150k</i><br />
<i>Stocks: Php 1M</i><br />
<i>Debt : 0</i><br />
<i>Other investments : Small land</i><br />
<i>Home: owned</i><br />
<i><br /></i>
<i>I am a frugal person and live simply. I am also a minimalist and I don't dabble in consumerism. I'm planning on not touching my paper assets till I'm old. I also have emergency fund worth 6 months of living expenses. However, I don't have insurance and would like to avail one. Please take note that I'm single and with no beneficiary.</i><br />
<i><br /></i>
<i>You think it's possible to quit work and "forget" about my paper assets and just move on with life without adding to it? How much you think my money would grow in 40 years considering inflation? I'm still investing 70-80 percent of my income as of the moment. How am I doing financially. I am a voluntary celibate and don't plan on marrying in the future so please consider that too esp with health care cost with no one to share the expenses when I'm old.</i><br />
<i><br /></i>
<i>Sorry if I have tons of questions. I just needed some advice on where I stand financially or if I can quit work by next year coz I feel so empty. I keep thinking if next year is the time where I can say to myself that " My earning days are over. Time for me to follow my dream"</i><br />
<i><br /></i>
<i>Good luck and thanks so much,</i><br />
<i><br /></i>
<i>Cory</i><br />
<i><br /></i>
(Additional information in response to a follow-up email.)<br />
<i><br /></i>
<i>4 million consist of emergency fund, mutual fund, stocks and the townhouse in Cebu (subdivision) which actually appraised at 1.3M and its in use (that's where I will live once I get home). My other land is totally small and idle that I did not count it in my asset. I consider my townhouse an asset, though.</i><br />
<i><br /></i>
<i>My expected expenses is P15k (scrimp) - P25k (splurge). I'm totally used to simple life and would like to live frugally. I am planning to live on my townhouse that I own when I grow old which is situated in Mactan, Cebu or I'll probably move somewhere quiet depending on the cost of living as long as its safe. <b>I'm not maarte :)</b> </i>(Emphasis is mine. - IJ)<br />
<i><br /></i>
<i>Thanks a bunch.</i><br />
<i><br /></i>
<i>Cory</i><br />
<br />
<br />
Dear Cory,<br />
<br />
Choosing to retire early compounds the "retirement problem" because the longer retirement period increases funding requirement, and at the same time, the smaller earning window makes it harder to meet the higher retirement fund target. It's still possible, though, if one starts saving early enough and earns (and saves) high enough. And from the information you've provided, I think you meet both criteria to a certain degree, we just have to see if you meet the criteria well enough.<br />
<br />
It's time to crunch some numbers (since we can't really use the <a href="http://www.investorjuan.com/2013/05/the-30-60-90-approach-to-retirement.html" target="_blank">30-60-90 framework</a> that I introduced a couple of posts back).<br />
<br />
Let's start by assuming that your assets will earn just enough returns to be able to beat inflation so that the spending power of your assets is constant throughout the planning horizon. Speaking of planning horizons, the typical end-of-horizon age planners use is 90 years, so let's start with that.<br />
<br />
Retirement period = 90 - 28 = 62 years * 12 = 744 months.<br />
<br />
Net worth = 4,000,000/744 months = <b>5,376 pesos per month</b>. <i>Can you live on this amount?</i><br />
<br />
Honestly, 90 years may be a bit conservative since it's well above the estimated <a href="http://en.wikipedia.org/wiki/List_of_countries_by_life_expectancy" target="_blank">life expectancy of Filipinos</a> (or people living in the Philippines?) of around 68 years. If we use 80 years, we get:<br />
<br />
Retirement period = 80 - 28 = 52 years * 12 = 624 months.<br />
<br />
Net worth = 4,000,000/624 months = <b>6,410 pesos per month.</b> Better, but maybe still not enough.<br />
<br />
Things don't look so good given the above assumptions. But if you subscribe to the concept of long-term passive investing, something like <a href="http://www.investorjuan.com/2011/05/financial-frenemies-robert-shiller-vs.html" target="_blank">Jeremy Siegel's "stocks for the long run"</a> argument (to which I completely adhere, but that's for another post), then the returns on your assets should be able to reliably beat inflation year-on-year and give your assets more spending power. The question is: how much more?<br />
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjArmPU3jfV8UvjzYWbCdSrEUvrXMKlddiU8T8bypVFnqtwWoF-F3wwDz8zryUVMr5AteZjSH1kERNY2mbjsZVKX9qQzBmXyunQ3dVAxNmZTLWV2Zbm7EqDhdJEThXTv6VC5LjQjNO9Nr4/s1600/2013-05-27+18.26.06.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="262" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjArmPU3jfV8UvjzYWbCdSrEUvrXMKlddiU8T8bypVFnqtwWoF-F3wwDz8zryUVMr5AteZjSH1kERNY2mbjsZVKX9qQzBmXyunQ3dVAxNmZTLWV2Zbm7EqDhdJEThXTv6VC5LjQjNO9Nr4/s400/2013-05-27+18.26.06.jpg" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><i>Click to enlarge</i></td></tr>
</tbody></table>
<br />
Please consider the timeline at the top of the image above. Say you withdraw an amount X from your assets for your expenses on your first year of retirement. The following year, you withdraw a higher amount, X*(1+<i>g</i>), where <u><i>g</i></u> is the average annual inflation rate. You keep on doing this until age 89, where you withdraw an amount equal to X*(1+<i>g</i>)^61.<br />
<br />
The sum of your withdrawals should of course be less than or equal to your total net worth of 4 million plus your investment returns, if your assets earn annual average return of <i>i</i>. Then, what would be the largest value of X given that you have 4 million in assets today, your assets can earn an annual return of <i>i</i>, and annual inflation is <i>g</i>? There are several approaches in solving for X, but the most straightforward is to get the present value of the withdrawals and equate it to 4 million using the formula:<br />
<br />
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<a href="http://upload.wikimedia.org/math/2/9/d/29def358b418103f96d8e8b50e016cfa.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="57" src="http://upload.wikimedia.org/math/2/9/d/29def358b418103f96d8e8b50e016cfa.png" width="320" /></a></div>
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The final equation is boxed in the image above.</div>
<br />
The <a href="http://www.nscb.gov.ph/secstat/d_price.asp" target="_blank">average annual inflation rate in the Philippines</a> in the past 10 years is around 4.5% (I thought it would be lower for outside the NCR, but it's not. This figure is for the entire country), so let's use that for <i>g</i>. Let's assume that you'll invest your assets in a diversified portfolio of stocks such that you'll earn the average annual return of the PSEi. I don't have exact numbers at the moment, so let's just use <i>i</i> = 7%, which I believe is a conservative estimate (given that the <a href="http://en.wikipedia.org/wiki/S%26P_500" target="_blank">S&P 500 has had an annualized return of close to 10% in the past 25 years</a>). Solving for X as shown in the image above, we get:<br />
<br />
<i>@ g</i> = 4.5%, <i>i</i> = 7%, X = <b>122,394 or 10,200 per month</b>. More workable?<br />
<br />
Of course, higher assumptions for <i>i</i> would further improve the situation.<br />
<br />
<i>@ g</i> = 4.5%, <i>i</i> = 8%, X = <b>149,695 or 12,475 per month</b><br />
<br />
<i>@ g</i> = 4.5%, <i>i</i> = 9%, X = <b>178,797 or 14,900 per month</b><br />
<b><br /></b>
You'll notice that this last estimate almost meets your "scrimp" budget, so I think your plan is workable. To make it really work, though, you would have to keep most of your assets in equities so that you'll have a higher chance of beating inflation every year, and beating it by a higher amount. Also, I still strongly encourage you to stick to <a href="http://www.investorjuan.com/2013/05/an-introduction-to-drrew-framework.html" target="_blank">the DRREW plan</a>--particularly, always have some amount ready for unexpected expenses and get some form of private health insurance. <br />
<br />
Finally, you may want to delay retirement for a few years and maybe build up your funds to 5 or 6 million. Try to play with the equation, change 4 million to a higher amount and instead of 60 change the exponent to <i>years of retirement - 1, </i>and see by how much X will increase.<br />
<br />Investor Juanhttp://www.blogger.com/profile/06304546864904571937noreply@blogger.comtag:blogger.com,1999:blog-5004589755220243665.post-65452677766017482542013-05-23T16:43:00.001+08:002013-05-23T16:59:37.541+08:00The 2013 Philippine Senatorial Elections: A Lesson in Statistics and FramingI was supposed to finish the draft of my dissertation this afternoon but something more important came up.<br />
<br />
This morning, while I was busy watching Game 1 of the Heat-Pacers series (coach Vogel, why did you take Hibbert out in the last couple of plays?) while doing laundry, a wild news article appeared:<br />
<br />
<a href="http://www.gmanetwork.com/news/story/309409/news/nation/ateneo-prof-s-60-30-10-poll-results-pattern-gets-comelec-s-attention" target="_blank"><i>Ateneo prof's 60-30-10 poll results pattern gets Comelec's attention</i></a><br />
<br />
The article talks about Ateneo de Manila Associate Professor Lex Muga and <a href="https://www.facebook.com/lex.muga/posts/4783147587919" target="_blank">his observation of an "interesting" pattern in the polling of partial results in the last Senatorial elections</a>. And if one takes a look at his recent public Facebook posts on the matter, one will see the following graphics.<br />
<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiQfdYoSaLateXxUvMrXHob1lEf313eEiEW3LPezo_TkNbqzFTfWJFb2KPfNnKgxQpHnPpteEe61IUbu22E5irwA2vlsu7IKI0bpLWLgvmsHS1nJ9Y742VYzOlDBEUFW5v9Jyg3HGZx-sU/s1600/Lex+Muga+02.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="187" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiQfdYoSaLateXxUvMrXHob1lEf313eEiEW3LPezo_TkNbqzFTfWJFb2KPfNnKgxQpHnPpteEe61IUbu22E5irwA2vlsu7IKI0bpLWLgvmsHS1nJ9Y742VYzOlDBEUFW5v9Jyg3HGZx-sU/s400/Lex+Muga+02.png" width="400" /></a></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhoe77BjS0kTT-HHbUzc9DQyvcpS5fXfMG8hlouM1rQCXNklDPjmSgWI5xXS7Y5SdtPwRIvoTU7Pqf405HzVP2JOX24gZ41LB_H7vgrnt4c4rijyi7of6t7Ymopqy_ep2HH8_CcyXxeJVk/s1600/Lex+Muga+01.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="187" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhoe77BjS0kTT-HHbUzc9DQyvcpS5fXfMG8hlouM1rQCXNklDPjmSgWI5xXS7Y5SdtPwRIvoTU7Pqf405HzVP2JOX24gZ41LB_H7vgrnt4c4rijyi7of6t7Ymopqy_ep2HH8_CcyXxeJVk/s400/Lex+Muga+01.png" width="400" /></a></div>
<br />
While Dr. Muga does not explicitly say anything in his Facebook posts, the article above managed to elicit his more exact thoughts on the matter:<br />
<br />
<i>“May pattern. Interesting pattern. Sabi ko nga na parang 60-30-10. Ang tanong ko, bakit ‘pag kunin mo ‘yung mga actual votes sa first canvass, second canvass, kuha sila mula sa isang probinsiya lang bakit 60-30-10 pa rin? Hanggang 16. ‘Di ba manggagaling naman sa iba-ibang probinsiya ang COCs (certificates of canvass) eh? So baka ‘di dapat ganun. <b>Dapat merong variation,</b>" Muga said in an interview aired on GMA News' "24 Oras." </i>(Emphasis is mine. - IJ)<br />
<i><br /></i>
In English, "there should be variation in the data," which implies that Dr. Muga sees no variation and that the "60-30-10" pattern is the same across all 16 canvas results.<br />
<br />
This is where things turn for the wrong.<br />
<br />
One thing that you'll notice in Dr. Muga's statistics and graphics is that there is no mention of sample size, or how large the data set involved is--and inadvertent or not, this is a critical omission. Yes, to the naked eye, the numbers seem to form a pattern. Yes, when our minds look at the data, there don't seem do be any significant differences in the proportion of votes for each coalition from canvas to canvas. However, the problem is that our eyes and minds are not always capable of seeing or comprehending differences that matter. <b><i>Any student of elementary statistics should know that even seemingly small or immaterial differences matter if the sample is big enough.</i></b><br />
<b><i><br /></i></b>
All the tools that we need are available to see if there is indeed a statistically significant pattern of constancy in the data. The data that Dr. Muga used is <a href="http://www.rappler.com/nation/politics/elections-2013/features/rich-media/29126-official-tally-votes-2013-senatorial-race" target="_blank">here</a>. And you can follow the results of my analysis with <a href="https://www.dropbox.com/s/fd3x6e7edgik0p4/2013%20Philippine%20Senatorial%20Election%20per%20Canvas%20per%20Coalition.xlsx" target="_blank">this Excel file</a>.<br />
<br />
Some clarifications before we start:<br />
<br />
<ul>
<li>What are we trying to prove or disprove? That the pattern that Dr. Muga has observed exists, <i>that the proportion of votes that went to each political coalition is constant from canvas to canvas. </i></li>
<li>For the sake of expediency, we will just focus on the proportion of votes for Team PNoy candidates.</li>
<li>We will use the incremental increases in votes from canvas to canvas. Seriously, it's idiotic to use the cumulative totals: of course it's going to converge to the population average, the denominator keeps on getting bigger and approaching the total number of senator-votes.</li>
<li>Since each voter can vote for 12 senators, then the appropriate unit of analysis is the senator-vote, where each voter has a maximum of 12 senator-votes. The number of "votes" in the spreadsheet or results are therefore not the same as the number of voters, but rather the number of senator-votes.</li>
</ul>
<div>
<b>Test 1: Comparing confidence intervals</b></div>
<div>
<br /></div>
<div>
A confidence interval is an interval estimate for a number that we don't know the true value of. For example, if the 95% confidence interval for the proportion of votes that went to Team PNoy is 59% to 61% (or [59%,61%]), then we can say that there is a 95% chance that the true proportion is between 59% and 61%. Why do I use the qualifier "true"? The true proportion is not exactly known because we don't have the complete results yet; each canvas tabulation is just a representative sample of the total population of senator-votes.</div>
<div>
<br /></div>
<div>
In the "PNoy" tab, I have computed for the confidence interval for each sample (i.e., canvas result) using the formula below at the significance levels 0.05 and 0.01 (significance levels basically measure how much room for error you are willing to accept).</div>
<div>
<br /></div>
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<a href="http://upload.wikimedia.org/math/9/6/c/96cc0c9ac4b09efa9665a1ef6777f6bc.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="http://upload.wikimedia.org/math/9/6/c/96cc0c9ac4b09efa9665a1ef6777f6bc.png" /></a></div>
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Confidence intervals make comparing two estimates easier. Basically, if the confidence intervals for two estimates overlap, then they are statistically equal. BUT if the confidence intervals don't overlap, then there is enough statistical evidence that the estimates are <i>not equal</i>.</div>
<div>
<br /></div>
<div>
In the "PNoy Confidence Intervals" and "PNoy Confidence Intervals (2)" tabs, I have compared the confidence intervals of the proportion estimates for each canvas using significance levels of 0.05 and 0.01, respectively. Both results show that out of 120 confidence interval pairs, only 3 overlap (3 vs. 14, 9 vs. 10, and 6 vs. 8). This means that up to a 1% significance level, <i>117 out of 120 pairs are statistically different! </i>This method therefore rejects the hypothesis that there is no variation in the data, or that the proportion of votes for Team PNoy is the same from canvas to canvas. Almost all of the proportions are statistically different!</div>
<div>
<br /></div>
<div>
<b>Test 2: Chi-square goodness of fit test</b></div>
<div>
<br /></div>
<div>
We can use this test for the hypothesis "<i>the proportion of votes that went to each political coalition is constant from canvas to canvas" </i>in one step. The proportion of the total number of votes up to the 16th canvas is 59.63%. If we assume that the same proportion of incremental votes in each canvas voted for Team PNoy, then the coalition should get the expected number of votes E per canvas, as shown in the "Chi Square" tab. </div>
<div>
<br /></div>
<div>
The Chi square statistic is given by</div>
<div>
<br /></div>
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<a href="http://upload.wikimedia.org/math/a/c/2/ac2ee1649209505db93d6bb426e61af5.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="http://upload.wikimedia.org/math/a/c/2/ac2ee1649209505db93d6bb426e61af5.png" /></a></div>
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If the statistic is big enough, it means that the set of observed or actual votes (O) for Team PNoy is statistically different from the set of expected votes (E), and the hypothesis is rejected. </div>
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<br /></div>
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The resulting Chi square statistic is 50,000+, which is more than enough to reject the hypothesis. Again, the data shows that the proportion of votes for Team PNoy is statistically different from canvas to canvas.</div>
<div>
<br /></div>
<div>
<b>Test 3: The "Random Coalition" eyeball test</b></div>
<div>
<br /></div>
<div>
There are plenty of things in statistics (or in the entire universe, actually) that are counter-intuitive or are hard to understand. </div>
<div>
<br /></div>
<div>
Take this last "test," for example. Choose any 9 senatorial candidate at random from the list of 33. I used my calculator's "Ran#" to draft my "dream team" of random senatoriables:</div>
<div>
<br /></div>
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj9Y0U65lPn0vwojS8lK1xXrf0eJfWGnXmlvW9K-BLUzMd-pMgHo8pfIMZmE0_DDGWSy7_pM9GzJy4hljRRf_wNYQSPGlF3VLcKfkdvWtaQAEpSkN8SN6eGgTzeCatEDYrxrQWlRU_wx7w/s1600/Random+coalition.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="77" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj9Y0U65lPn0vwojS8lK1xXrf0eJfWGnXmlvW9K-BLUzMd-pMgHo8pfIMZmE0_DDGWSy7_pM9GzJy4hljRRf_wNYQSPGlF3VLcKfkdvWtaQAEpSkN8SN6eGgTzeCatEDYrxrQWlRU_wx7w/s400/Random+coalition.png" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><i>Please click to enlarge.</i></td></tr>
</tbody></table>
<div>
Plotting the percentages using the same axis as Dr. Muga, we get:</div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhkjY9YCuUeUQxnvhAT5cx4HdTXmPHVMR8Ke3RzMBZ4InUnsfCgUyR31s8nnX1gtK7X0Yc4hzXc_WynFCCpkppzlF0JdRw9v32Cx73QfarH5nTwqMZI_Yk_dQ3VU_OKoTMbkM-7YSEF1sY/s1600/Random+graph+01.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="238" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhkjY9YCuUeUQxnvhAT5cx4HdTXmPHVMR8Ke3RzMBZ4InUnsfCgUyR31s8nnX1gtK7X0Yc4hzXc_WynFCCpkppzlF0JdRw9v32Cx73QfarH5nTwqMZI_Yk_dQ3VU_OKoTMbkM-7YSEF1sY/s400/Random+graph+01.png" width="400" /></a></div>
<div>
<br /></div>
<div>
What wizardry is this? A similar pattern for a random group of candidates?</div>
<div>
<br /></div>
<div>
We also have to remember, however, that a lot of times, things are not as simple or straightforward as they <i>look</i>. The same data using a different vertical axis:</div>
<div>
<br /></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjJz8poCFyMlwOQwUv_YyA9PwIoxpyrcDxX2H_GlDVkQOrVPxMSENQnGPW1LuAJkxkV9L417MPBFtChMnwDsmwFo_grmNwA6yN2HvT8y0-aC9Q8fsXRsHJDOJN-f2Yc9KeNYhi_6bfJVvY/s1600/Random+graph+012.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="238" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjJz8poCFyMlwOQwUv_YyA9PwIoxpyrcDxX2H_GlDVkQOrVPxMSENQnGPW1LuAJkxkV9L417MPBFtChMnwDsmwFo_grmNwA6yN2HvT8y0-aC9Q8fsXRsHJDOJN-f2Yc9KeNYhi_6bfJVvY/s400/Random+graph+012.png" width="400" /></a></div>
<div>
<br /></div>
<div>
Replication of graph for Team PNoy proportion of votes that Dr. Muga posted in Facebook:</div>
<div>
<br /></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh7xTfOAtxqilD8l1xRj-u-XJlC86GU396AqPKKhlGEEqXn-FaAsjn7dj2cd2RjmlBL3_Pjr2-_Dj0cG1JpXkErcnh3sCQAOJxwNECCDY4vXyeWYnYR5jEd_HF-WKYgxiH0TD9xuixKthA/s1600/PNoy+01.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="238" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh7xTfOAtxqilD8l1xRj-u-XJlC86GU396AqPKKhlGEEqXn-FaAsjn7dj2cd2RjmlBL3_Pjr2-_Dj0cG1JpXkErcnh3sCQAOJxwNECCDY4vXyeWYnYR5jEd_HF-WKYgxiH0TD9xuixKthA/s400/PNoy+01.png" width="400" /></a></div>
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Same data, using a different vertical axis.</div>
<div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiaomBs70ZiBQNFIy4qSBLnb01E21JTRpIsJw-VrLA27wadOTF-ydwk9-UNYev1bab9duLvxMOXwExD_y6uVdkdH12Mj9-LyH-Fh-v8-mFK_I_QCo-StFbivRimsnW20fGICZx-16DMcHY/s1600/PNoy+02.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="238" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiaomBs70ZiBQNFIy4qSBLnb01E21JTRpIsJw-VrLA27wadOTF-ydwk9-UNYev1bab9duLvxMOXwExD_y6uVdkdH12Mj9-LyH-Fh-v8-mFK_I_QCo-StFbivRimsnW20fGICZx-16DMcHY/s400/PNoy+02.png" width="400" /></a></div>
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*Sigh*</div>
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I'm sure a lot of shenanigans happened in the last elections. There's one more thing that I'm sure of, though: whatever happened is not reflected by the data, and that the "interesting" pattern that Dr. Muga observed does not really exist.</div>
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Just remember two things: 1) the sample size matters; and 2) framing matters.</div>
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<i>For those who missed it, the Excel file that contains all the data and analysis is <a href="https://www.dropbox.com/s/fd3x6e7edgik0p4/2013%20Philippine%20Senatorial%20Election%20per%20Canvas%20per%20Coalition.xlsx" target="_blank">here</a>.</i></div>
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Investor Juanhttp://www.blogger.com/profile/06304546864904571937noreply@blogger.comtag:blogger.com,1999:blog-5004589755220243665.post-19488797265853128642013-05-21T12:48:00.000+08:002013-05-21T13:29:11.559+08:00An Introduction to the DRREW Framework<b>DEAR INVESTOR JUAN</b><br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgVXpaKxL1nuWK7LaLo4rNk8rcZXkU00mhVJlCRAY-R0LccmFU1KM3KBc007xKpMenf0bE1h9kq_PRKF1dLKw0Oz6GFXhph89lZoBswj5pTm7Ebl_shiMi8ffUNFd2nyTU22jYih8YkTfM/s1600/financial+planning+2.gif" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="125" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgVXpaKxL1nuWK7LaLo4rNk8rcZXkU00mhVJlCRAY-R0LccmFU1KM3KBc007xKpMenf0bE1h9kq_PRKF1dLKw0Oz6GFXhph89lZoBswj5pTm7Ebl_shiMi8ffUNFd2nyTU22jYih8YkTfM/s400/financial+planning+2.gif" width="400" /></a></div>
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<i>Dear Investor Juan,</i><br />
<i><br /></i>
<i>Hello po and good day!</i><br />
<i><br /></i>
<i>I have been reading about financial freedom, investing and mutual funds (through Francisco Colayco's book) but it was only until very recently that I put things to heart and thus stumbled upon this blog.</i><br />
<i><br /></i>
<i>I am 23 years old and just recently gave birth to a healthy baby girl. My partner is 26 years old. I've only really been working full time for a year now and my partner for half so perhaps you can give me some slack and skip on the sermon on why we have not saved much.</i><br />
<i><br /></i>
<i>We are still on the process of building on our emergency fund and only have around 10k in time deposit. I guess that would pretty much be our net worth (maybe perhaps a little higher if you include the 7k (9k worth, I think) air conditioner plus a few books, some baby stuff and a 1-year-old netbook that we could sell just in case).</i><br />
<i><br /></i>
<i>Anyway, here is an overview of our monthly expenses:</i><br />
<i>Utilities/Home Expenses - 10k (we still -shamefully- live with my parents)</i><br />
<i>Budget for baby - 10k</i><br />
<i>Daily allowance for me and hubby - 4k</i><br />
<i>VUL from PRU Life - 3k (I got this for myself before I got pregnant)</i><br />
<i>Leaving us around 5-6k for savings</i><br />
<i><br /></i>
<i>Perhaps you could give us advice on what you think of this plan. We used your Budget Planner excel sheet, by the way. We want to build up on our emergency fund but I am also contemplating about investing in mutual funds as well (at least just the initial 5K) since we will be expecting a midyear bonus come June 2013. My plan is to save at least 6K a month, perhaps get the 1k and place it in mutual funds. What do you think?</i><br />
<i><br /></i>
<i>I know you would not suggest having the VUL but I already got it anyway. My hubby and I are both covered by HMO (plus baby will be soon, as well) and I'm thinking about making the emergency fund as a health fund, for the mean time.</i><br />
<i><br /></i>
<i>We are also thinking about getting a Volkswagen Beetle which is around 35k-50k - I think it could really help us lessen transportation expenses as we ride the taxi when taking our baby with us. We also have to save up for baby's first birthday February next year (haha) and then eventually for her education, which maybe 50k a year in today's money and rates.</i><br />
<i><br /></i>
<i>We do have plans of investing in an agricultural lot in the future - in five years, maybe? And then perhaps an apartment in ten. Anything that generates passive income.</i><br />
<i><br /></i>
<i>Well, my letter is quite long now and it's probably giving you a headache. Compared to your other letter senders, I think we are quite low on money, no? But hey, it's never too late, right? We're still quite young and I also have my parents with me (hehe) whom I can ask for help if really needed. I also keep telling myself that, at least, as early as now, I am already thinking about having financial goals and changing the way we handle our money.</i><br />
<i><br /></i>
<i>PS. I believe we could really achieve our financial goals - we were able to save up around 50K in just 3 months (and that doesn't count the monthly expenses we had to deal with) in time for my delivery.</i><br />
<i><br /></i>
<i>PPS. I work as a freelance writer once in a while and I was wondering if you could refer me to the friend you were talking about in one of your blog posts. </i><br />
<i><br /></i>
<i>Thanks in advance, Investor Juan and more power! And thanks a lot for teaching me so many invaluable lessons in personal finance. :)</i><br />
<i><br /></i>
<i>Pam</i><br />
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<br />
Dear Pam,<br />
<br />
First, let me get one thing out of the way: you and your partner are actually doing quite well. You have a positive net worth and presumably not in debt, you're still young, are both employed, and so have plenty of time and opportunities to prepare for the future. And perhaps what's most important is that you are aware of the need to take control of your finances, and have started to do something about it. Believe me, you guys are off to a very good start.<br />
<br />
Now let me address your other concerns.<br />
<br />
Over the years, I have been developing a framework for managing personal and household finances, an early version of which you may have already come across in <a href="http://www.investorjuan.com/2011/03/6-steps-guide-for-newbie-investors-part.html" target="_blank">this series of posts</a>. The latest version, which I'm presenting for the first time in this post, looks like this:<br />
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<b>Stage 1:</b> Eliminate (expensive) <b>D</b>ebt<br />
<b>Stage 2:</b> Manage <b>R</b>isk with health and life insurance and an emergency fund<br />
<b>Stage 3:</b> Save and invest for <b>R</b>etirement<br />
<b>Stage 4:</b> Save for discretionary future <b>E</b>xpenses<br />
<b>Stage 5:</b> Build-up <b>W</b>ealth<br />
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(I hate acronyms, but I guess they're okay if they can help people remember important things... so there you go--<b>DRREW</b>).<br />
<br />
I'll explain this framework in a dedicated post in the near future, but for now I think the only item that needs a bit more explaining is "discretionary future expenses." This item consists of high-priced purchases (home or car) and future needs that require a substantial amount of money (wedding, child's future education, European holiday, etc.). Depending on the actual item or need, planning for the purchase or expense may take priority over saving for retirement. For example, you might want to prioritize saving for your child's education over your retirement savings.<br />
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So right now, you are in Stage 2. You're employed, so you're amply covered by insurance, and you're starting to build up your emergency fund. Regarding this, I suggest that you take out the 10,000 from the time deposit account and just place it in a savings account. The purpose of an emergency fund is to have money in hand for emergencies so that you won't have to rely on debt (which tends to be expensive if taken on short notice) or selling your assets at a loss. Emergency funds need to be accessible any time, and it's okay if you don't earn interest--remember, you're not saving to get rich, you're saving for emergencies. Since you're spending around 25,000 per month, you have to continue adding to your emergency fund until you accumulate 150,000 to 200,000 pesos.<br />
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Regarding the VUL, if it's impossible to get out of the deal without incurring fees or losing more money, then just stay. But please just stick with your premiums and don't invest any more than you have to.<br />
<br />
Once you have your emergency fund taken care of, the proceed to Stage 3 and save and invest for retirement. You have determine how much you have to save for this (it's something that I've talked about in the last post and in a future follow-up post). And this is where your plan to invest in property comes in: retirement savings need to be invested in long-term vehicles such as real estate and low-fee equity funds. So you have the right idea, just remember what you are saving for.<br />
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I guess that's pretty much all I can offer now. Thanks for the email and congratulations on the great start. I'll email you in private about that writing "racket." Good luck!<br />
<br />Investor Juanhttp://www.blogger.com/profile/06304546864904571937noreply@blogger.comtag:blogger.com,1999:blog-5004589755220243665.post-36160209061940372013-05-17T16:09:00.001+08:002013-05-17T16:09:13.940+08:00The 30-60-90 Approach to Retirement Planning, Part 1: Estimating Monthly ExpensesThis is something that I have been working on in the past couple of months, and I feel that now is a good time to share it with you.<br />
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The right way to do retirement or financial planning is to estimate future annual earnings and expenses, before and after retirement, using a set of assumptions as I have demonstrated <a href="http://www.investorjuan.com/2011/05/financial-planning-for-rest-of-your.html" target="_blank">here</a> and <a href="http://www.investorjuan.com/2013/04/retirement-planning-with-excel-part-2.html" target="_blank">here</a>. The problem with this approach is that it may be too complex and daunting for many individuals. <b>The 30-60-90 framework</b> is a simple, easy to use and understand tool for estimating the amount one needs to save in order to cover retirement expenses. Despite its simplicity, the approach is well grounded in theory as it considers important considerations such as inflation and investment returns.<br />
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<b>30-60-90?</b><br />
<b><br /></b>
The name comes from the premise that an individual would start to save for retirement at 30, retire at 60, and pass away at 90; the implication that the saving period equals the retirement (or zero income) period equals 30 years makes a simpler analysis possible. Being in a 30-60-90 situation means that you have 30 years to earn what you expect or aim to spend in your 30 years of retirement. Ignoring inflation and interest for the moment, this means that by the time you retire you will have accumulated 3 million pesos in wealth, which you will then use in equal increments of 100,000 per year in the next 30 years and your wealth will have been depleted to zero at the end of your 90th year. <i>(While the 30-60-90 scenario may not perfectly fit everyone, it's a good enough description of a person's condition such that whatever accuracy is lost is made up for by the usefulness of the model. In any case, the model is easy enough to adjust to a comparable configuration such as 35-60-85 or 40-60-80, as long as the saving period is the same as the retirement period and you're comfortable with the life expectancy estimate).</i><br />
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<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEguoUTMeaYTJS5FLL7Njusi8cLsYQZuzCOsj3ejmsMspD8vFivP05zWoo2TQJCuM5j9Vr1aOYbpD0zYVLWTrNoLqTMIPzKJ8SX7NF-dwAdlf4FBUur77o7Ymj7Jt9xqQj9tMUmxi9lYHiA/s1600/30-60-90+Pyramid+w+watermark.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="212" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEguoUTMeaYTJS5FLL7Njusi8cLsYQZuzCOsj3ejmsMspD8vFivP05zWoo2TQJCuM5j9Vr1aOYbpD0zYVLWTrNoLqTMIPzKJ8SX7NF-dwAdlf4FBUur77o7Ymj7Jt9xqQj9tMUmxi9lYHiA/s400/30-60-90+Pyramid+w+watermark.png" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><i>Click to enlarge</i></td></tr>
</tbody></table>
The question is, in a 30-60-90 scenario, how much do you actually have to save per month or per year for retirement, given your chosen lifestyle, inflation, and the possibility of earning from investments? To find an answer, let's take look at the situation in another way. The image above shows how your total wealth will behave given the saving and spending pattern described previously. What we can do is rearrange some of the green "blocks" above and invert the right side of the pyramid so that it will look like this:<br />
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<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh33yuuNuke6wx-X1tH4fnZOs58B8ypHMvAEcPC0L2duU-Wbzrw_gn-4RugKVGMXdfNySE3IAig43AFzBaJkd7UM-m0M6WYzi1E1sU5TkaPV1rudxToCR8XTHmfdWGufQD8cM2rMO_evCY/s1600/30-60-90+ladder+w+watermark.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="215" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh33yuuNuke6wx-X1tH4fnZOs58B8ypHMvAEcPC0L2duU-Wbzrw_gn-4RugKVGMXdfNySE3IAig43AFzBaJkd7UM-m0M6WYzi1E1sU5TkaPV1rudxToCR8XTHmfdWGufQD8cM2rMO_evCY/s400/30-60-90+ladder+w+watermark.png" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><i>Click to enlarge</i></td></tr>
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In the first image, it seems that the first 100,000 deposit takes 59 years before it is used up, the second 100,000 takes 57 years, and so on, until the 29th 100,000 lasts for three years, and the final 100,000 (the tip of the pyramid) gets used up in one year (the 60th year). If we rearrange the blocks like in the second image, instead of having multiple/different horizons for your deposits, now <i>each</i> 100,000 deposit gets withdrawn after 30 years, and <b>all deposits have the same 30-year horizon</b>.<br />
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This is what makes the 30-60-90 tool useful: it assumes that whatever you set aside for retirement in a particular month or year, you withdraw and use 30 years later. And since all deposits to your retirement fund have the same horizon, you just have to compute for one amount that you need to save in a particular month or year.<br />
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<b>Estimating retirement expenses</b><br />
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The process starts by estimating your monthly or annual expenses for when you retire <i>but at today's prices</i>. If you want to maintain your current lifestyle, just estimate your personal expenses per month, on average; adjust the amount upward or downward if you prefer a more comfortable or a simpler lifestyle, respectively. Do not adjust for inflation--at least not yet, we'll go to that later. Also, estimate only your personal retirement expenses--not your wife's or whoever else's--unless your wife is a home-maker (i.e., unemployed for life) and do not include discretionary expenses such as your child's college tuition as these will have to be considered separately. The basic components of your estimate should be food, rent/housing, and transportation.<br />
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To give you an example, I recently asked a good friend to do this exercise. According to him, he would need 400 pesos per day for food and other daily expenses, and 20,000 per month for rent and car payments, which amounts to 32,000 pesos per month in today's peso.<br />
<br />
If we live in a world where prices are constant and investments don't earn returns, using the 30-60-90 framework, my friend has to save 32,000 per month just to meet his retirement expenses given his chosen lifestyle. Seems daunting, doesn't it? What if we consider inflation, and my friend just chooses to tuck away his savings in a bank savings account? Then he'll definitely need to save more than 32,000 per month today. How about if he invests his retirement fund in a "riskier" investment such as an equity UITF, how will this affect his savings goal?<br />
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In Part 2 next week, we'll discuss exactly how inflation and investment returns figure into the model. For now, try to estimate your monthly retirement expense in today's peso and see if you can afford to save that amount.<br />
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Have a great weekend!<br />
<br />Investor Juanhttp://www.blogger.com/profile/06304546864904571937noreply@blogger.comtag:blogger.com,1999:blog-5004589755220243665.post-71970825902520842212013-05-15T18:06:00.000+08:002013-05-15T18:06:32.288+08:00Invitation for the First Philippine Junior Finance and Investment Summit<b>DEAR INVESTOR JUAN</b><br />
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<a href="https://fbcdn-sphotos-e-a.akamaihd.net/hphotos-ak-ash4/255680_467799166622064_38785738_n.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="150" src="https://fbcdn-sphotos-e-a.akamaihd.net/hphotos-ak-ash4/255680_467799166622064_38785738_n.jpg" width="400" /></a></div>
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This request is from one of my former students. Since CFA Philippines is a non-profit entity, I feel that promoting one of their events on the blog does not violate my self-imposed ban on advertising.<br />
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***<br />
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<i>Dear Investor Juan,</i><br />
<i><br /></i>
<i>Good day!</i><br />
<br />
<i>The Chartered Financial Analyst Society of the Philippines (“CFA Philippines”), a non-profit professional membership organization of finance and investment practitioners will be holding its “First Philippine Junior Finance and Investment Summit” on July 6, 2013, Saturday, from 9:00 A.M. to 5:00 P.M at the SMX Convention Centre. This event aims to enhance financial literacy and elevate the quality of the finance profession in the country. This finance career and educational campaign will help students and young professionals prepare for a career in the finance and investment industry through presentations and discussion forums. </i><br />
<i><br /></i>
<i>So far, we have invited well-known and seasoned speakers to talk in this event. I believe the </i><b style="font-style: italic;">admission fee will be less than Php 500 including packed lunch and snacks</b><i> </i>(emphasis is mine - IJ)<i>. Hope you can help us promote the event! :D</i><br />
<i><br /></i>
<i>Confirmed speakers are:</i><br />
<i> </i><br />
<i><b>Philippine Economy: Asian Perspective</b></i><br />
<b><i>International Monetary Fund</i></b><br />
<i>Peiris, Shanaka Jayanath</i><br />
<br />
<i><b>Stock Market Investments</b></i><br />
<b><i>COL Financial Group</i></b><br />
<i>April Lynn Tan, CFA</i><br />
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<i><b>Trust Products</b></i><br />
<b><i>Banco de Oro Unibank</i></b><br />
<i>Marvin Fausto</i><br />
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<i><b>Discussion on Careers in Finance and Investment Industry</b></i><br />
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<b><i>Ayala Corporation</i></b><br />
<i>Ginaflor Oris, CFA</i><br />
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<b><i>Bangko Sentral ng Pilipinas</i></b><br />
<i>Mary Jane Chiong, CFA</i><br />
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<b><i>HSBC</i></b><br />
<i>Maria Corazon Dela Cruz-Purisima</i><br />
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(There are some other important speakers who have been invited, but I have removed their names from the list since their attendance has not yet been confirmed. -IJ)<br />
<i><br /></i>
<i>Regards,</i><br />
<i><br /></i>
<i>Jane</i><br />
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***<br />
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The registration procedure is still in the works, so until it is finalized feel free to visit the event's <a href="https://www.facebook.com/PhilippineJuniorFinanceInvestmentSummit" target="_blank">Facebook page</a> for updates.<br />
<br />Investor Juanhttp://www.blogger.com/profile/06304546864904571937noreply@blogger.com